Shell boss opposes windfall tax as profits soar 14-fold

The boss of Shell has said his company is facing a “difficult situation” after the business reported a 14-fold increase in profits as the price of gas soared.

The business leader also batted away suggestions of a windfall tax on oil and gas giants that proponents say could help households facing a 50% spike in energy bills caused by high gas prices.

He said that a “small player” like Shell could only do so much to influence the price of energy.

“On one hand we see a booming market, particularly for gas, but also for oil. But at the same time we are struggling as an industry to keep up with supply,” Ben van Beurden told reporters on Thursday.

“It is actually quite an extraordinary situation, quite a difficult situation as well. First of all for many households, but also for companies, including for us for that matter because we much prefer a stable and steady market development rather than the one that we are experiencing at the moment, much like a roller coaster,” he added.

He said: “It is a concerning picture and we completely understand that. But of course this is driven very much by a global dynamic, which as a small player like we are, with sort of 1.5% of energy supply, there’s only so much that can be done by a company like us.”

Shell should instead ensure that it continues to supply critical supplies to customers and that it can bring gas from elsewhere in the world to Europe in order to alleviate shortages.

“I am not convinced that windfall taxes are going to help us with supply, nor is it going to help us with demand. But of course we stand ready to be in dialogue with the Government on all the measures that we can collectively take.”

It has been a bumper three months for energy giant Shell and the oil giant is now handing 8.5 billion dollars back to shareholders.

As prices surged, the company’s upstream unit was able to collect 8.88 dollars for every thousand cubic feet of gas it sold to customers over the last quarter of 2021.

Just six months earlier gas had been selling for 4.31 dollars, less than half of its most recent level.

Gas prices have been pushed up in the past year for many reasons, including Russia restricting supply to Europe and China buying up more international gas shipments.

Meanwhile, winds in Europe were unusually still last summer, meaning more gas was needed to replace the electricity that would otherwise have been produced by wind turbines.

The price rises have led to energy suppliers going out of business, contributed to soaring inflation, and from April 1 households will be hit with a hike in energy bills of nearly £700.

But for Shell the rises in gas prices, and an 18% spike in the price at which its upstream business sold oil, helped propel it to a 16.3 billion US dollar (£12 billion) pre-tax profit in the fourth quarter of last year, compared with just 1.2 billion dollars (£885.5 million) in the third quarter.

On Thursday the Government was facing calls to slap a windfall tax on oil and gas companies, after ministers were forced to step in to shield households from runaway gas prices.

In the Commons some MPs questioned whether oil companies like Shell, which increased its profits 14-fold in part thanks to rising gas prices, should be hit with a windfall tax.

Labour’s Nick Smith said: “Does he (the Chancellor) really think that the super profits of 20 billion dollars made by Shell are untouchable? His hands-off approach won’t persuade many people across our country.”

Chancellor Rishi Sunak dismissed the idea of a windfall tax.

Shell has recently moved its headquarters to the UK, simplified the company’s previously confusing share structure, and dropped the “Royal Dutch” part of its name.

Officially the company formerly known as Royal Dutch Shell is now just Shell plc.

These bumper profits have given Mr van Beurden the chance to treat his shareholders.

Combined with 5.5 billion dollars (£4.1 billion) from the sale of a massive US oil field, he plans to return 8.5 billion dollars (£6.3 billion) to investors by buying back their shares.

“Today we are stepping up our distributions with the announcement of an 8.5 billion dollar share buyback programme and we expect to increase our dividend per share by around 4% for Q1 (first quarter) 2022,” he said in an update to the stock market on Thursday.

Shell’s adjusted earnings reached 19.2 billion dollars (£14.2 billion) in 2021, more than four times its level a year earlier.