Shell doubles its profits to $9.5bn as call for windfall tax grows

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Shell has reported profits of nearly $9.5bn (?8.2bn) between July and September, more than double the amount it made during the same period a year earlier, as it said it would increase its payments to shareholders.

The oil company continued to benefit from soaring energy prices prompted by Russia’s invasion of Ukraine, but it was not able to match the record $11.5bn profit it earned between April and June, because of weaker refining and gas trading.

Despite this, the FTSE 100 company’s third quarter earnings were higher than the $9bn forecasts by analysts, and were more than double the $4.1bn reported in the same quarter in 2021.

Oil companies’ bumper profits have prompted calls for higher taxes on the sector, and are likely to lead to fresh demands from political parties including Labour, the Liberal Democrats and the Greens, as well as from environmental campaigners, for the new government led by Rishi Sunak to look again at a higher windfall tax on oil companies.

The results came as the Anglo-Dutch firm announced plans to buy $4bn of stock over the next three months in an extension of its share repurchasing programme. It intends to complete the programme by the start of February 2023.

Shell and other big oil and gas companies have been enjoying soaring profits and booming trade since the Kremlin’s invasion of Ukraine in late February pushed oil and gas prices higher. This has come in stark contrast to households and businesses, who have been struggling with rocketing energy bills.

However, oil prices have fallen from their highs of $120 a barrel of brent crude in June to current levels of about $95 a barrel, while natural gas prices have also dropped and are about 70% lower than their peak in late August.

Surging profits have prompted a cash bonanza for oil producers and their shareholders. Shell said it would pay its investors an interim dividend of $0.25 a share, but announced its intention to increase this by 15% for the final three months of the year.

Shareholders in Shell received $6.8bn over the past three months, related to the second quarter’s record profits, which came on top of the $7.4bn they received in the first quarter of the year.

Shell said its profits over the past nine months “mainly reflected higher realised prices, higher refining margins, higher trading and optimisation results” compared with the same period in 2021, which was “partly offset by lower volumes, and lower chemicals margins.”