Weekly News Review - 5th May 2023
Shell, BP and ExxonMobil announce first-quarter profits totalling over £20bn
Oil and gas giants Shell and ExxonMobil have both reported record first-quarter profits, with BP also seeing strong profits in the first three months of the year. Shell announced stronger than expected profits of £7.6bn which were boosted by strong trading in it chemical and refined products business. The company have said that £3.2bn will be returned to shareholders by buying back shares over the next quarter.
ExxonMobil’s profits more than doubled to £9.1bn, up from £4.4bn last year, despite the fall in oil and gas prices and a £160m hit from windfall taxes paid across Europe. They also announced that shareholders would receive $6.4bn including dividends and $300m in share buybacks.
BP have reported first-quarter profits of £4bn which were slightly lower than the £4.9bn last year. The company said it had seen an “exceptional” performance from gas marketing and trading, and “very strong oil trading”. The excess profits announced this week have led to renewed calls for a stronger windfall tax.
The Energy Profits Levy (EPL) was introduced by the government last year to tax excess profits made from extracting UK oil and gas. The EPL is currently set at 35%, and takes the total UK tax rate to 75% when combined with existing taxes on oil and gas companies. However, companies can include losses or investment in their UK oil and gas business to reduce the amount of tax they pay.
Liberal Democrat leader Ed Davey said: “These eye-watering profits are a kick in the teeth for all those struggling to pay their energy bills.” He added that the government had “let oil and gas giants off the hook for billions of pounds while people and businesses struggle to pay for their gas and electricity”.’
Sharon Graham, the general secretary of the Unite union, said: “The scale of profiteering displayed today by Shell and earlier this week BP is one of the corporate scandals of our times. And this is practically untouched by Rishi Sunak’s so-called windfall tax. Not taking any action against ‘Big Oil’ means the profiteering plundering will continue without end.”
Seabed power grid to link North Sea wind turbines
Offshore wind farm developer Cerulean Winds has announced plans to build a vast power grid on the seabed of the North Sea as part of a £20bn project to provide renewable electricity to oil and gas platforms. The North Sea renewables grid (NSRG) will be powered by clean energy generated by floating wind farms.
Frontier Power and Cerulean were offered the largest share of seabed leases in the recent Crown Estate Scotland innovation and targeted oil and gas round. Together the companies will develop three 333km2 sites containing hundreds of floating wind turbines.
The first phase of the NSRG project will focus on oil and gas operators to support their brownfield modifications, while subsequent phases will focus on exporting clean energy to the grids in the southern UK and Europe. Cerulean says the plan will support up to 10,000 jobs, mostly in the supply chain in Scotland, and hopes to have the infrastructure in place by 2028.
Dan Jackson, director of Cerulean Winds, said: “The oil and gas sector is wrestling with the challenges of meeting the North Sea transition deal emissions reduction targets whilst supporting UK energy security. We recognise that to achieve meaningful reductions at the pace required, a reliable basin-wide approach is needed that they can plug into when they are ready for affordable power.”
“Early oil and gas electrification supports the country’s energy security and net zero action, and delivers huge benefits to the supply chain and economy, creating 10,000 jobs. With our partners we will accelerate access to green power and provide the infrastructure for the next phase of the North Sea’s life.”
Humza Malik, founding partner of Frontier Power, added: “For the oil and gas companies, this diversity of offtake provides robustness to the scheme and added flexibility. For Scotland, the HVDC transmission not only provides clean energy to the National Grid, but provides export of power directly to continental Europe.”
UK businesses face significant delays for solar installations
Some businesses and households in the UK are facing significant delays to install solar panels due to a number of barriers. The Environmental Audit Committee (EAC) has said that access to finance and inadequate battery storage are preventing the UK from reaching its full solar potential. They are calling on the government to consider offering affordable loans for households and extending VAT discounts to battery storage.
An inquiry by the EAC has found that the government’s ambition to install 70GW of solar by 2035 may not happen if these delays continue. They are urging the government to collaborate with distribution network operators and National Grid ESO to seek short-term solutions to address these issues.
MPs said there were three key areas where the current approach on grid connection was delaying progress: a lack of physical infrastructure such as cables and transformers; poor availability of data on solar generation; and a “queueing system” of applications where developers are applying for grid connections without the project having planning permission.
The chair of the committee, Philip Dunne, said: “There is potential for solar energy to have a bright future in the UK, but a dark cloud of delays for the industry hinders the ability to meet its full potential. Evidence to our committee made clear that the UK has the potential to fulfil the UK’s ambition of 70GW of generating capacity from solar. But sticking points for households around access to finance and VAT being slapped on batteries remain.
“The ability for low-carbon energy sources, including solar, to be able to connect to the grid could seriously jeopardise net zero Britain. Our solar inquiry found that some developers wait up to 15 years for a grid connection: this simply isn’t good enough. We must make sure that concerns around infrastructure and planning are addressed swiftly.
“Given our committee’s mounting concerns over grid connections for low-carbon energy projects, we are today launching a new inquiry that will consider this in greater detail. I encourage anyone with views on these issues to submit evidence.”
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