BP quarterly profit surges on high energy prices

London – BP said Tuesday that underlying third-quarter profit more than doubled on high commodity prices after key energy producer Russia’s invasion of Ukraine but logged a net loss on accounting charges.

Replacement cost profit soared to $8.2 billion in the three months to September, the British energy major announced.

That compared with $3.3 billion a year earlier and outstripped market expectations of $6.1 billion.

Yet profits were weaker than the second quarter due to a dip in oil prices.

London-listed BP, flush with cash, also revealed a $2.5-billion share buyback but its stock slid in morning deals.

Energy markets remain elevated due to Russia’s war in Ukraine, which has sent British household fuel bills rocketing — but helped generate massive profits across the industry.

Energy prices also leapt on strong demand after nations lifted Covid pandemic lockdowns.

– Windfall tax –

Runaway profits have heightened calls for Britain to massively enlarge its windfall tax to help cushion the impact of a cost-of-living crisis largely sparked by sky-high electricity and gas bills.

Tuesday’s bumper earnings — after vast profits at Chevron, Shell and TotalEnergies — will not diminish those calls, according to analysts.

“This isn’t going to ease calls for windfall taxes at a time when governments are facing fiscal black holes requiring difficult decisions on taxation and spending,” said Oanda analyst Craig Erlam.

“Finding the right balance between taxing ‘excess profits’ as a result of the war in Ukraine without deterring investment won’t be easy.”

BP added Tuesday that it will pay about $2.5 billion in taxes this year for its North Sea business, including $800 million related to the levy.

New British Prime Minister Rishi Sunak unveiled the windfall tax on the profits of UK energy companies earlier this year when he was finance minister in Boris Johnson’s government.

Sunak has so far resisted calls to increase the tax, deemed far too small by activists.

– Energy transition –

“With the economy sinking, energy bills soaring and the climate crisis deepening, Rishi Sunak must surely act on the excessive profits that fossil fuel firms like BP are raking in,” said Sana Yusuf, a campaigner at Friends of the Earth.

BP says it is seeking to pivot towards cleaner energy and away from fossil fuels, sparking deep scepticism from environmental groups who accuse it of greenwashing.

“This quarter’s results reflect us continuing to perform while transforming,” said Chief Executive Bernard Looney.

“We are providing the oil and gas the world needs today — while at the same time investing to accelerate the energy transition.”

BP agreed this month to buy US renewable gas producer Archaea for $4.1 billion.

The group added Tuesday that it faced a net loss of $2.2 billion in the third quarter on large accounting charges. That followed a loss after tax of $2.5 billion last time around.

BP’s share price slid 0.7 percent to 476.25 pence in morning deals on London’s rising stock market.