Oil – Russia’s invasion of Ukraine in 2022 resulted in a spike in gas and oil prices.
In the months that followed, gas stations raised their pricing, helping companies turn a healthy profit.
The firms with $199.3 billion in sales last year are listed below:
- BP (BP
- Chevron {CVX)
- ExxonMobil
- Shell
- TotalEnergies (TOT)
TotalEnergies announced a year profit of $36.2 billion on Wednesday, surpassing sales for 2021 for the first time in the company’s history.
Other Western energy giants also benefited from the significant boost in profits.
Investors profited greatly in the interim.
Despite clear evidence that the world has to act more quickly to solve climate challenges, the influx of cash hasn’t resulted in a surge in investments in renewable energy.
Turnaround
After enduring losses and declining shareholder payments in 2020 as a result of the pandemic lockdowns that decreased energy usage and raised the price of oil, the sector had a stunning reversal with the enormous gains.
The sharp increase in oil and gas costs after the economy recovered is to blame for the turnaround.
When Russia invaded Ukraine in February 2022, it became worse.
Despite the advances, oil firms face criticism, mostly for their price and investments in non-traditional forms of energy.
Additionally, the two circumstances led European governments to enact windfall taxes.
As energy prices climb, the money will help households make ends meet.
Shareholders
However, the additional tax obligations and investments in new sources are dwarfed by the more than $100 billion in dividends paid to shareholders by the top five oil and gas companies in the global private sector.
The favorable increase was noted by Tom Ellacott, senior vice president for corporate research at Wood Mackenzie.
“It’s been a spectacular year for shareholder distributions,” said Ellacott.
With TotalEnergies’ price growing by 11% at the bottom and Exxon’s price rising by 39% at the top, share prices have significantly increased in the most recent year.
Even though she believes dividends would remain high until 2023, Ellacott indicated that higher oil prices will likely be required to sustain the size of share repurchases witnessed in 2018.
However, a number of businesses have already signaled plans to sell shares worth billions of dollars in order to repurchase their own stock.
Chevron, who will be the Dow’s top-performing company in 2022, said in January that it will purchase nearly $75 billion worth of its own stock.
When making its decision, the Biden administration didn’t take this issue lightly.
White House press secretary Abdullah Hasan said:
“For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it.”
Read also: Bed Bath & Beyond seem destined for bankruptcy
More energy
While corporations have increased their spending on oil and gas as demand has grown and European governments have taken efforts to replace Russian supply, they have only made modest investments in renewable energy while investors have received substantial dividends.
The annual capital expenditures for oil and gas were around $470 billion, according to Wood Mackenzie (excluding the hunt for new resources).
Despite how encouraging the figures appear, they are still below pre-pandemic levels.
However, the analyst predicted an increase in 2023.
The International Energy Agency declared in 2021 that the world must stop investing in the production of new fossil fuels if it is to meet the Paris Climate Agreement’s target of keeping global warming to 1.5 degrees Celsius above pre-industrial levels.
Major oil firms are still pouring billions of dollars into the quest for new oil and gas reserves.
The activist shareholder organization Follow This was founded by Mark Van Baal, who asserted in a statement:
“If the bulk of your investments remain tied to fossil fuels, and you even plan to increase those investments, you cannot maintain to be Paris-aligned, because you will not achieve large-scale emissions reductions by 2030.”
Production slash
BP announced a strategy to reduce oil and gas output by 40% from 2019 levels by 2030 three years ago.
The corporation said on Tuesday that it would no longer be achieving the goal and that output in 2030 would now be around 23% lower.
Instead of expecting a 35% to 40% reduction, BP now projects a 20% to 30% reduction in carbon emissions from oil and gas production by 2030.
BP’s CEO, Bernard Looney, issued the following statement:
“It’s clearer than ever after the past three years that the world wants and needs energy that is secure and affordable, as well as lower-carbon.”
“We need continuing near-term investment into today’s energy system – which depends on oil and gas – to meet today’s demands and to make sure the transition is an orderly one.”
By investing more than 30% of its $16.3 billion in capital expenditures in “transition” regions last year, BP remained committed to being a net-zero emissions firm by the year 2050.
The majority of the money was used to pay $3 billion for the US business Archaea Energy, which turns biological waste into natural gas.
For the following objectives, Shell’s Renewables and Energy Solutions division got $3.5 billion, or 14% of its overall capital expenditures:
- Carbon capture and storage
- Electricity generation
- Hydrogen production
- The trading of carbon credits
According to Shell, roughly $21 billion, or one-third of the overall budget, was allocated to “low- or zero-carbon firms.” This graph reflects operations.
According to Shell CEO Wael Sawan, in order for the world to transition to renewable energy more quickly, the following decisions must be made:
- Government policy
- Customer uptake
- Continued investment in gas and oil companies
Sawan claims that Shell is making an effort to allocate money in the proper proportions.
Image source: Washington Post
