BP's profits fall as oil prices fall

Energy giant BP announced a sharp drop in profits after oil prices fell last year.

Profits were $13.8bn (£11bn) in 2023, down from a record $27.7bn the previous year.

Energy companies reported huge gains when oil and gas prices rose in the wake of Russia's invasion of Ukraine due to concerns about supplies.

Although home energy bills have decreased since 2022, they remain at a high level.

These are the first results released by BP since the company announced the appointment of Murray Auchincloss as its new CEO.

BP's lower profits mirror the results achieved by rival Shell, which last week reported profits of $28.2 billion, down from $39.9 billion in 2022.

Despite the decline, BP's profits are still – with the exception of last year – the highest since 2012.

The company plans to return $1.75 billion to investors during the first three months of the year through stock buybacks. It added that it is committed to repurchase operations worth $3.5 billion during the first half of 2024.

BP also said it expects “underlying production from oil production and operations to be higher” this year, but gas and low-carbon energy production to be lower.

Last year, BP came under fire from environmental groups after it scaled back plans to reduce the amount of oil and gas it produces by 2030.

Reacting to the latest findings, global campaign group Global Witness said BP was on the wrong track.

“Shareholders should want to protect their long-term positions. This means demanding a rapid clean energy transition for companies like BP. These reckless payments to shareholders do the opposite,” said the group's Jonathan Noronha-Gantt.

However, last week it emerged that one investor group – BlueBell Capital Partners – called on BP to scrap its targets to cut oil and gas production altogether, describing them as “irrational”.

Energy prices started rising when coronavirus lockdowns ended, but they jumped in March 2022 when Russia launched its attack on Ukraine. There were concerns about disruption to energy supplies, and several countries, including the United Kingdom, imposed sanctions preventing the import of all oil and petroleum products from Russia.

The price of benchmark Brent crude reached nearly $128 a barrel shortly after the invasion, but now stands at just under $80.

Rising prices in 2022 have all energy companies making big profits. In response, the UK government imposed an unexpected tax, called… Energy Profit Tax (EPL)regarding companies' “extraordinary” profits from their UK operations to help fund a scheme to support gas and electricity bills.

BP said its North Sea business paid $1.5bn (£1.2bn) in UK tax in 2023, of which $720m was owed to the EPL. The previous year, it paid $2.2 billion in taxes for its North Sea operations, including $700 million from the English Premier League.

There were fears that oil prices might rise as a result of attacks launched by Houthi rebels on ships in the Red Sea, but so far these fears have not changed much.

The attacks prompted several companies, including BP, to divert ships out of the way through the Suez Canal. It is the fastest sea route between Asia and Europe and is of particular importance in transporting oil and liquefied natural gas.