Shell made a record profit of nearly $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.
Europe’s biggest oil company by revenue on Thursday reported adjusted full-year profits of $39.9 billion – more than double the $19.3 billion it had posted in 2021 – thanks to a strong performance in gas trading. The company’s shares were up 2.6% at midday in London.
Just over 40% of Shell’s full-year profits came from its integrated gas business, which includes its liquefied natural gas trading operations. The unit was responsible for nearly two-thirds of Shell’s $9.8 billion profit in the last three months of the year.
Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio as well as our ability to deliver vital energy to our customers in a volatile world.”
The earnings are the latest in a string of record results for the world’s biggest energy companies, which have enjoyed huge gains thanks to rising oil and natural gas prices.
ExxonMobil reported a record full-year profit of $59.1 billion this week. Last month, Chevron (CVX) posted a record full-year profit of $36.5 billion.
This led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.
Shell said it expects an additional tax burden of $2.3 billion in 2022 related to an unexpected EU tax and levy on UK energy profits. The company paid $13.1 billion in taxes worldwide in 2022.
Shell also announced another $4 billion share buyback program, which it expects to complete by May, and confirmed it will increase its dividend per share by 15% for the fourth quarter.
The company will return $26 billion to shareholders in 2022 through share buybacks and dividend payments.
By comparison, it spent about $21 billion on its low-carbon or net-zero businesses last year, or about one-third of total spending, Chief Financial Officer Sinead Gorman told reporters on a call Thursday.
Of that, about $4 billion was invested in its Renewables and Energy Solutions division, which includes electricity generation, hydrogen production, carbon capture and storage, and carbon credit trading.
The unit generated less than 5% of group profit in 2022, underscoring the scale of the challenges Shell faces as it seeks to transition from oil and gas to low-carbon energy.
The company on Thursday drew criticism from climate activists for not moving fast enough.
“Shell cannot claim to be in transition as long as investment in fossil fuels exceeds investment in renewables,” Mark van Baal, founder of shareholder activist group Follow This, said in a statement.
“The majority of Shell’s investments remain tied to fossil fuel businesses as the company does not aim to reduce its overall CO2 emissions this decade.”
Shell has invested approximately $12.4 billion in its integrated oil and gas exploration units in 2022.
Asked if Shell could invest more in renewable energy, Sawan said he believed the company was “finding the right balance in our capital allocation”.
He said Shell is on track to halve emissions from its own operations by 2030 compared to 2016 levels. More than 90% of Shell’s emissions come from customer use of its products. It plans to reduce these so-called “scope 3” emissions by 20% by 2030.
Shell plans to become a net zero emissions company by 2050.
Greenpeace activists are staging a protest this week on a Shell contract vessel in the Atlantic Ocean carrying equipment to redevelop the Penguins oil and gas field in the North Sea. The environmental group said in a statement that the aim of the protest was to “highlight the global climate devastation caused by Shell”.
In a statement shared with CNN, a Shell spokesperson said the activists boarded a “moving vessel in rough conditions” and “cause real safety concerns.”
“Projects like Penguins … help reduce the UK’s dependence on higher carbon imports and more expensive energy. Local and responsible production of oil and gas is vital to the UK’s energy security and is fully in line with a net zero approach,” the spokesperson added.