British Petroleum, the British energy giant, said that its withdrawal from Russia as a result of the war in Ukraine pushed it into the red in the first quarter of 2022.
And “BP” announced, in a statement, that it recorded its largest quarterly net loss of 20.4 billion US dollars, in the period from January to March, compared to a profit of 4.7 billion dollars in the previous year (2021).
There have been repeated calls in Britain for an unexpected tax on major energy companies, as consumers grapple with a cost-of-living crunch caused by the highest rate of inflation in decades, and as economies reopen from pandemic lockdowns.
BP booked $25.5 billion in pre-tax fees following withdrawing its 19.75% stake in Russian energy group Rosneft, ending more than three decades of investment in Russia.
According to thesundaily, the Q1 2022 performance was driven by what BP described as an “exceptional” performance in its oil and gas trading division.
Most companies have seen fluctuations in oil and gas prices, Chief Financial Officer Murray Uchenkloss said.
BP’s refined petroleum products unit posted a profit of $1.6 billion in the first three months, compared to a loss of $26 million in the previous quarter and a loss of $2 million a year earlier.
“Our decision in February to relinquish our stake in Rosneft resulted in a non-cash material charge and a major loss,” CEO Bernard Looney said.
This has offset the positive impact of higher energy prices, spurred on by fears of tight supplies in the wake of Russia’s – oil and gas producer – war in Ukraine.
However, on a fundamental level, higher energy prices enabled BP to post its best performance in three months since 2008 with a profit of $6.2 billion.
“In a quarter dominated by the catastrophic events in Ukraine and volatility in energy markets, BP’s focus has been on providing the reliable energy our customers need,” Looney said.
BP investment plans
BP also revealed plans to invest up to £18 billion in its UK green and fossil fuel operations by the end of the decade.
While Looney said BP was “fully committed to turning UK energy” to net zero, as the company “intends to continue investing in North Sea oil and gas” amid Britain’s near-term energy security needs in the wake of the Ukraine war.
“We support Britain,” Looney said. “It has been our home for more than 110 years, and we have been investing in North Sea oil and gas for over 50 years.”
In the North Sea, BP plans to develop “low-emission oil and gas projects to support near-term supply security”.
The company also proposed new offshore wind projects and plans for hydrogen production facilities.
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Despite massive losses in the first quarter, BP’s share price jumped 2.9% to 403p in morning trading Tuesday, on the FTSE 100 index in London, which was generally lower.
BP buys back shares
Investors welcomed BP’s announcement that it will buy back $2.5 billion in stock.
BP said it would increase its quarterly share buybacks to $2.5 billion before the end of the second quarter following its cash flow surplus rose to more than $4 billion.
BP said in February it would speed up its share buybacks to $1.5 billion per quarter from $1.25 billion.
BP previously stated that it would buy back $4 billion annually at oil prices of $60 a barrel, well below the current price of benchmark Brent crude, which was around $107 today.
The company maintained its dividend at 5.46 cents per share.
BP’s net debt fell sharply to $27.5 billion from $30.6 billion at the end of 2021.
“It can be argued that the exit from Russia, while bringing in high costs, is helping to turn the group around, and the strong cash flow is helping to reduce debt,” said Ross Mold, investment director at AJ Bell.
He added: “BP has ambitious plans to become cleaner and greener but today’s update is a reminder that fossil fuels, with all the environmental and geopolitical chaos that entails, remain central to the company at the moment.”
