Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

BP and Shell to face pressure as profits set to soar

BP reports results on Tuesday while Shell will report on Thursday (Dominic Lipinski/PA)
BP reports results on Tuesday while Shell will report on Thursday (Dominic Lipinski/PA)

London’s biggest oil companies will face an odd dilemma next week as they present what is likely to be their best set of results for years while facing calls to cough up more in tax.

The businesses are predicted to report a combined 13 billion dollars (£10.5 billion) in profit from the first three months of the financial year, a massive hike from the same time in 2021.

A lot of this will come from the cash households are paying to keep the lights on, heat their homes, and fill up their cars.

It will likely spark renewed calls for a windfall tax on the companies – an idea already backed by Labour.

Earlier this week, the Chancellor appeared to distance himself from such a tax but did not entirely rule it out.

He called on companies making big profits to invest the cash back into the UK instead.

“It sounds appealing. ‘Great, we’re taxing bad energy companies more, that will solve all our problems’,” he said in an interview with Mumsnet.

“The reason we haven’t gone down that road is, really simply … we need to invest more. That’s why we haven’t gone for some extra tax. Because what I don’t want to do is discourage investment in our own energy supplies.

“But what I’d say is, look, if we don’t see that type of investment coming forward and if the companies are not going to make those investments in our country and in our energy security, then, of course, that’s something I would look at and nothing’s ever off the table.”

Rishi Sunak’s comments, and talk of a meeting with Business Secretary Kwasi Kwarteng on Friday, where the companies were reportedly told to keep investing, will likely be ringing in executives’ ears.

Shell expects to report adjusted earnings of 8.7 billion dollars (£7 billion), according to a company-compiled consensus of analyst estimates.

BP is forecast to report 4.5 billion dollars (£3.6 billion) in replacement cost profit.

But it is not all plain sailing for the businesses. The same war in Ukraine that has pushed up the price of the oil and gas they sell has also forced them to deal with significant costs.

Earlier this month, Shell increased its estimated costs of exiting Russia from 3.4 billion dollars (£2.7 billion) to closer to 5 billion (£4 billion).

“Quite who the buyer of these assets will be remains to be seen, given that the list of those prepared to ignore sanctions and do business in Russia is relatively short,” said AJ Bell investment director Russ Mould.

But this cost will not be seen in the adjusted earnings, mentioned above, as it is considered a one-off.

BP reports its results on Tuesday and Shell on Thursday.

Already a subscriber? Sign in