The mammoth profits of the world’s oil and gas giants will pass £200 billion when Saudi Aramco unveil their record results next month, with the state-backed energy titan on course to post the most lucrative results in the history of business.
Closer to home, BP and Shell unveiled their own mega earnings, announcing record annual profits of £23bn and £32bn respectively, fueled and designed by soaring fossil fuel prices and rebounding post-pandemic demand last year.
When pressured over their bumper profits, the energy giants position themselves as major players in British drive for energy independence and for reaching its ambitious climate goals.
BP and Shell have pledged to spend £18bn and £25bn respectively over the current decade on domestic energy projects, with an emphasis on zero and low carbon energy developments.
This is an appealing commitment, with Downing Street desperate to reduce the UK’s reliance on overseas vendors to meet its energy needs following sanctions on Russia.
The western countries are boosting now domestic energy generation, especially renewables such as offshore wind, solar and hydrogen. The question remains whether BP and Shell’s green spending matches those aspirations.
BP has agreed deals to develop offshore wind in the Irish and North Sea to power six million homes, alongside spending commitments for blue and green hydrogen in Teeside and a £1bn pledge to ramp up the extra polluting electric vehicle charging nationwide.
Shell is backing multiple UK-based offshore wind and blue hydrogen schemes including 5GW of floating offshore wind turbines and a blue hydrogen project with Uniper in the Humber region.
These future ambitions, however, seem poorly served by present day spending. BP is utilizing around 30% (£4.1bn) of its capital expenditure worldwide for low carbon and renewable projects last year.
It is targeting 40% of total spending to be on green energy projects by 2025 and aim for it to be around 50%– or £5.9bn to £7.5bn – in 2030. Shell is calculating it has spent £6.7bn – £8.4bn this year on renewable projects this year worldwide.
To aggravate matters, BP has rowed back some of its key climate pledges such as easing plans to slash the amount of oil and gas it produces over the current decade to meet global demand.
Meanwhile, Shell has revealed that new UK energy projects will be a ‘case by case’ issue after Chancellor Jeremy Hunt toughened the windfall tax last November 2022.
Shell and ScottishPower have joined forces to develop the MarramWind offshore wind farm, which could deliver up to 3 gigawatts of so-called cleaner renewable energy.
Unfortunately those windmill towers need to be replaced after one decade, while those parts are not recyclable and form use amounts of polluting waste, probably dumped some where in those African countries for relief.
We currently have three super-taxes on the North Sea, the rates of which have changed eight times in the last 21 years, including twice in the last year.
These are the tax and spending policies of banana republics not stable investment regimes. They signal that investments made today can be plundered tomorrow, whether in oil and gas, or wind farms, hydrogen, and carbon capture.
With BP and Shell so integral to the UK’s energy aspirations, it remains to be seen whether they can rise to the challenge of boosting the country’s green ambitions – which will be the only way to silence their critics.
Oil Price.com / ABC Flash Point News 2023.