Oil majors face backlash as era of big profits returns

Soaring energy prices have brought massive profits to oil majors — along with fierce criticism from environmentalists and politicians at a time when consumers are left with rising bills.

US firm ExxonMobil, France’s TotalEnergies, and UK giants Shell and BP announced in the past week 2021 profits totalling a whopping $66.7 billion.

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

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

The main international and US contracts rose to seven-year highs in January and now sit at around $90. Gas prices, meanwhile, hit records in Europe.

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

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 their cost-cutting policies which started in a previous price slump in 2014.

A gradual increase in output by Opec and its allies has also helped.

ExxonMobil went from a $22.4 billion loss in 2020 to a $23 billion profit in 2021.

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

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

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

Prices at the pump and utility bills, meanwhile, have gone up for consumers.

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

But the performances at the companies 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’s head of climate Kate Blagojevic said in a statement.

“BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favourable tax regimes in the world for offshore drillers,” she said.

“So, yes, the profit rebound of the oil majors could continue in 2022.” — AFP