Mon, Feb 14, 2022 page11

• Refiners’ banner year stirs backlash

  • AFP, PARIS
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  Soaring energy prices have brought massive profits to oil majors — along with fierce criticism from environmentalists and politicians saying that consumers are left with rising bills.

  US firm Exxon Mobil Corp, France’s TotalEnergies SE, and the UK’s Shell PLC and BP PLC last week posted combined profits of US$66.7 billion for last year.

  It marked a huge turnaround from 2020, when they posted losses as the COVID-19 pandemic emerged, prompting lockdowns that dampened the world economy and caused crude prices to collapse.

  

  A man refuels his car at a TotalEnergies SE gas station in Toulouse, France, on Thursday.

  Photo: Bloomberg

  However, oil and gas prices rallied last year, surging to US$70 per barrel after briefly sinking into negative territory in 2020.

  The main international and US contracts further rose to seven-year highs last month, and last week were at about US$90. Gas prices hit records in Europe.

  “Oil companies benefited from an extraordinary alignment of the planets,” said Moez Ajmi, an oil industry expert at Ernst & Young.

  In addition to higher energy prices, energy firms “cleaned up” their assets to only keep the most profitable ones, Ajmi said.

  The companies also strengthened cost-cutting policies that started in a previous price slump in 2014, he said, adding that a gradual increase in output by OPEC and its allies has also helped.

  Exxon Mobil went from a US$22.4 billion loss in 2020 to a US$23 billion profit last year.

  Shell was US$20.1 billion in the green last year after a US$21.7 billion loss in 2020.

  TotalEnergies went from a historic US$7.2 billion loss to a 15-year high profit of US$16 billion.

  BP’s recovery was not as big, going from US$20.3 billion in the red to US$7.6 billion in the green.

  The company said the result would allow it to accelerate “the greening” of the company.

  However, the performances triggered calls for a windfall tax on the profits of energy firms in the UK.

  “These profits are a slap in the face to the millions of people dreading their next energy bill,” Greenpeace UK climate head Kate Blagojevic said in a statement.

  “BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favorable tax regimes in the world for offshore drillers,” she said. “These are the same companies responsible for pushing our world closer to catastrophic climate change.”

  Seeking to head off a political storm, British Prime Minister Boris Johnson earlier this month announced a package of financial support after the state energy regulator lifted prices, but the opposition Labour Party said it was not enough.

  British Chancellor of the Exchequer Rishi Sunak’s “energy plans last week left families more worried than ever,” British Shadow Chancellor of the Exchequer Rachel Reeves of the Labour Party wrote on Twitter after the refiners published their results. “It’s time for Labour’s plan for a one-off windfall tax on oil & gas producers to cut bills.”

  Sunak rejected the idea.

  European lawmaker Yannick Jadot, the candidate of Europe Ecology — The Greens in the French presidential election in April, spoke out against profits made “on the back of French men and women” while “gas and petrol bills rise for the benefit of shareholders.”

  TotalEnergies CEO Patrick Pouyanne said that if the company paid more to governments, “it would be at the expense of investments, workers or shareholders.”

  However, in an apparent move to fend off criticism, TotalEnergies last week announced a discount at the gas stations in rural areas of France along with a voucher of 100 euros (US$114) for people struggling to pay their gas bills.

  Meanwhile, il majors could be in for another banner year, as analysts forecast oil prices climbing to US$100 per barrel.

  “The health crisis appears to be ending, the economic recoveries in China, the United States and Europe don’t appear to be flagging, supply continues to be limited due to a lack of oil investments in the past two years and environmental pressure,” Ajmi said. “The profit rebound of the oil majors could continue in 2022.”
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