Shell posts ?10bn quarterly profits as households struggle with bills

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Shell made record profits of nearly ?10bn between April and June and promised to give shareholders payouts worth ?6.5bn as the oil supermajor benefited from the surge in energy prices prompted by Russia’s invasion of Ukraine.

The FTSE 100 company made adjusted profits of $11.5bn (?9.5bn) during the second quarter of the year, beating its previous high – set between January and March – by 26%. The profits were more than double the same period in 2021.

The roaring trade for Shell, BP and other major oil and gas companies has stood in contrast to households and much of the rest of the economy, who have had to deal with higher energy prices that have caused inflation to soar to 40-year highs in the UK and elsewhere, and which threaten to tip economies into recessions across much of the world.

The scale of the oil companies’ profits prompted the UK government to eventually give in to demands for a windfall tax to redistribute some of the profits, although some senior Conservative ministers are thought to favour removing the tax, amid a leadership campaign that will lead to a new prime minister and cabinet in September.

The windfall tax – known as the energy profits levy – will not apply until 14 July, meaning the second-quarter profits and payouts to shareholders were not affected.

Yet it has remained a bonanza for Shell and its shareholders, who received $7.4bn in the first quarter of 2022 and will receive another $6bn in a share buyback and $1.8bn in dividends announced on Tuesday.

Shell said it had experienced “higher realised prices, higher refining margins and higher gas and power trading”.

Vladimir Putin’s invasion has meant that Shell may have to abandon its stake in the Sakhalin-2 gas project with Russia’s Gazprom. Yet the recognised costs of abandoning Russia are $4.3bn – just over a third of the profits Shell has made in three months since Kremlin troops entered Ukraine. The company had already booked costs worth $4.2bn related to its withdrawal from Russia, but it increased this estimate by only $111m in the second quarter of the year.

Shell said it expected the tight energy market was here to stay. It added $4.3bn to its income attributable to shareholders to account for higher than expected prices in the mid- and long-term “reflecting the current energy market demand and supply fundamentals”.

Ben van Beurden, Shell’s chief executive, recognised the “huge challenges for consumers, governments and companies alike” caused by the “volatile energy markets”, but argued that the company is “using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions and transforming our company for a low-carbon energy future.”