BP expects to pay ?700m in windfall tax after bumper profits

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BP said it expected to pay about $800m (?693m) in windfall tax on its North Sea operations this year, as it posted bumper profits of $8.2bn in the third quarter.

The FTSE 100 oil company said the figure covered the seven months from the levy’s introduction until the end of the year, and its total tax bill on its North Sea operations this year would be about $2.5bn.

Ministers are considering whether to extend the windfall tax on North Sea oil and gas operators.

Analysts had expected a drop-off in BP’s huge profits to about $6.6bn in the third quarter of the year after raking in $8.5bn in the second quarter. However, the slowdown was smaller than expected despite BP noting “weaker refining margins” and lower oil prices.

The $8.2bn third-quarter profit far outstrips the $3.3bn of underlying profits recorded in the equivalent period of 2021.

The BP chief executive, Bernard Looney, said: “We are providing the oil and gas the world needs today – while at the same time investing to accelerate the energy transition.”

The new chancellor, Jeremy Hunt, is reportedly considering an increase in the windfall tax by up to five percentage points to 30% and extending its lifespan by three years to 2028.

The energy profits levy was introduced in May by the then chancellor, Rishi Sunak, who estimated it could raise ?5bn.

However, BP’s rival Shell said last week it had paid zero windfall tax in the UK despite making record global profits of nearly $30bn so far this year. Its British corporate entity did not make any profits during the last quarter after investing in drilling more oil in the North Sea.

Hunt is due to present his tax and spending plans in his autumn statement on 17 November.