Shell profit doubles to record as war drives up energy costs

Global energy giant Shell said Thursday that its annual profits doubled to a record high last year as oil and natural gas prices soared after Russia's invasion of Ukraine.

London-based Shell Plc posted adjusted earnings of $39.9 billion for 2022 in its financial results for the final three months of the year. Adjusted earnings in the fourth quarter, which exclude one-time items and fluctuations in the value of inventories, rose to $9.8 billion.

Shell is the latest oil company to report bumper profits, even as the fossil fuel industry faces increasing pressure to cut climate-changing carbon emissions. US-based Exxon Mobil also posted record annual profits days earlier, while UK rival BP and France's TotalEnergies posted huge quarterly profits last year.

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The results demonstrate Shell's “capacity to deliver vital energy to our customers in a volatile world," new CEO Wael Sawan said in a statement.

It's the first earnings report presented by Sawan since he took over as chief executive at the start of the year, replacing Ben van Beurden, who stepped down after nine years. Sawan also has reorganised the company's core business units.

Sawan, who has worked for Shell for 25 years, was previously director of its integrated gas, renewables and energy solutions business. His appointment was seen as a part of Shell's strategy to take what it calls a leading role in the energy transition despite criticism that it's been slow to cut emissions.

Shell also is raising its dividend payout by 15 per cent and buying back $4 billion worth of shares — moves that underline the tension between energy company shareholders seen as reaping big profits and consumers weighed down by higher costs for heating their homes and filling up their cars.

To ease the pain on households and consumers, the European Union and individual countries like Britain and Spain have imposed windfall taxes on energy companies, and US President Joe Biden has raised the idea of a war profit tax.

“For the millions of people globally who are struggling with the high cost of energy or the impacts of the climate crisis, Shell reaping in record profits will rightly feel incredibly unfair,” said Alice Harrison of Global Witness, a nonprofit that advocates for environmental sustainability and corporate responsibility.

Global Witness filed a complaint Wednesday with US regulators accusing the company of greenwashing. The group asked the Securities and Exchange Commission to investigate whether Shell broke securities laws and misled investors about the extent of its renewable energy investments.

Global Witness says its analysis shows that 1.5 per cent of the company's capital spending went to wind and solar power generation, compared with the 12 per cent that Shell claimed in its 2021 annual report.