LONDON, UK – Energy giant BP has reported a significant decrease in profits following a decline in oil prices last year. The company’s profits fell to $13.8bn in 2023 from a record $27.7bn in the previous year.
Energy firms experienced substantial gains when oil and gas prices surged after Russia’s invasion of Ukraine due to concerns about supplies. Although household energy bills have decreased since 2022, they are still at relatively high levels.
These results mark the first time BP has reported earnings since announcing Murray Auchincloss as its new chief executive. The company plans to return $1.75bn to investors through share buybacks in the first three months of the year, with an additional $3.5bn committed for the first half of 2024.
While sharing their expectations for the year, BP stated that they anticipate higher oil production and operations, but lower production from gas and low carbon energy. This forecast comes after the company received criticism from environmental groups for scaling back their plans to reduce oil and gas production by 2030.
Reacting to the latest results, campaign group Global Witness expressed disapproval of BP’s approach, urging shareholders to demand a swift transition to clean energy. On the other hand, one investor group, BlueBell Capital Partners, called on BP to abandon its targets for lower oil and gas output, labeling them as “irrational.”
The surge in energy prices was prompted by Russia’s assault on Ukraine and led to the UK government implementing a windfall tax, known as the Energy Profits Levy (EPL), to manage the extraordinary earnings of energy companies. Furthermore, attacks on shipping in the Red Sea by Houthi rebels raised concerns about potential oil price surges, prompting companies like BP to reroute ships away from the Suez Canal, a crucial route for the transportation of oil and liquefied natural gas between Asia and Europe.