BP profits of £4bn in 3 month spark criticism

Oil and gas giant BP has reported another set of strong results as energy prices remain high.

Profits hit $5bn (£4bn) in the first three months of the year, although this was down from $6.2bn last year with oil prices having fallen from the peak seen after Russia’s invasion of Ukraine.

Bumper profits from energy firms have led to calls for them to pay more tax with households facing high bills.

Labour called for a “proper” windfall tax on energy profits.

“Of course we want BP and others to make profits so they can invest but these are profits that they didn’t expect to make, these are profits that are over and above because the world price of energy is so high,” Labour leader Sir Keir Starmer told BBC Breakfast.

BP reported record annual profits last year as the company - along with the rest of the energy sector - benefitted from the surge in oil and gas prices following Russia’s invasion of Ukraine.

It has led to big profits for energy companies, but also fuelled a rise in energy bills for households and businesses.

Nick Butler, a former BP executive and visiting professor at Kings College London, said the strong results had come “from a good internal business performance but also from high prices around the world”.

But he told the BBC’s Today programme the firm’s profits were likely to “come down quite a lot this year” as oil and gas prices were falling back. “That will have an impact on the revenue they get and the taxes they pay.”

Last year, the UK government introduced a windfall tax on profits made from extracting UK oil and gas - called the Energy Profits Levy (EPL) - to help fund its scheme to lower gas and electricity bills.

The UK’s windfall tax rate is 35%. Oil and gas firms also pay 30% corporation tax on their profits as well as a supplementary 10% rate.

Along with the windfall tax, that takes their total tax rate to 75%, although companies are able to reduce the amount of tax they pay by factoring in losses or spending on things like decommissioning North Sea oil platforms.

BP said its UK business - which accounts for less than 10% of its global profits - paid $650m (£520m) in tax between January and March, with about $300m due to the EPL.

Since the EPL was introduced last year, BP says it has now paid an additional $1bn in tax.

The price of Brent crude oil reached nearly $128 a barrel following the invasion of Ukraine, but has fallen back since. Its price averaged $81 a barrel in the first three months of the year, which was down 16% from the same period in 2022.

Wholesale gas prices have also started to fall, which has raised hopes that household bills will start to come down this summer.

However, BP said it expected oil prices to remain “elevated” in the second quarter given the recent decision by some oil producing nations to restrict output as well as increasing demand from China.