Record snow cap is good for shareholders, but criticism is mounting

Record snow cap is good for shareholders, but criticism is mounting

With oil and gas companies collectively increasing their profits by more than 100 billion euros last year, the question arises whether it is fair for companies to make so much profit. There is unease among lawmakers, and the previous day, US President Biden named the American oil company ExxonMobil as “Pockeager”.

The debate is not new. Last summer, it became clear that companies like Shell and ExxonMobil were gaining momentum from the war in Ukraine. Oil and gas prices rose amid uncertainty over supplies from Russia, while profits for oil and gas companies rose. On the other hand, oil companies lost a large part of their investments in Russia, but this amount is in stark contrast to the additional income.

Shell’s outgoing CEO, Ben van Beurden, previously said he was aware that the gains were “very significant”. He described the high prices as a “global phenomenon” that Shell can do little against.

with LPG

The reason for the increased profit is simple. Oil and gas became scarce, and as a result, the value of commodities mined by oil and gas companies skyrocketed. This is clearly reflected in Shell’s figures. The gas producing and trading liquefied natural gas (LNG) unit made 176% more profits last year, reaching more than 20 billion euros.

The part that extracted oil from the ground made a profit of 14.7 billion, or 69 percent more, among other things. The part that deals with sustainable energy does much less. Nearly 1 billion lost.

unexpected tax

In response to rising profits, the UK has imposed a new tax on energy companies: an unexpected tax or an unexpected tax. Oil companies have to pay extra for the profits they make from oil and gas produced on British soil. The British Prime Minister Sunak, who recently took office, introduced the tax while he was the Finance Minister.

The European Union is also working on such a tax. ExxonMobil is trying to prevent this and is preparing a lawsuit. According to the oil company, such a tax would have the opposite effect and reduce investment.

Shell took into account that the additional tax had to be paid and set aside about 2 billion euros. There remains enough profit because the money is not part of the 38.5 billion euros the company reports as profit today.

Most of the billions of profits go to shareholders in the form of dividends. In addition, Shell is repurchasing shares for around 4 billion euros. This raises the stock price, which is good for existing shareholders.

Wael Sawan, Shell’s new Canadian-Lebanese CEO, understands that people who themselves suffer from high energy prices are surprised by Shell’s record profits. “These are incredibly difficult times. When I return to Lebanon, I see what people are going through. Sometimes they are without electricity all day. These are the challenges we see in many parts of the world.”

Still, the new CEO doesn’t justify the criticisms against Shell, as he believes the company is trying to provide enough energy. “We managed to ship 194 LNG shipments to Europe this year to ensure the lights stay on where they would normally go out,” Sawan said.

Sustainability

According to Shell, last year it invested a third of its profits in the energy transition. But the way the company organizes its activities causes some confusion. Shell CFO Sinead Gorman spoke about “low carbon or zero carbon investments” in a phone press conference today.

Activist shareholders at Follow This mincemeat Shell’s presentation on energy transition investments. “It’s really a smokescreen to hide the fact that they invest so little in real sustainable energy like solar panels and wind turbines,” says Mark van Baal, founder of Follow This. “To cover up the fact that they want to stay a fossil fuel company for as long as possible.”

Source: NOS

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