18.02.2023
The five largest Western oil and gas companies announced profits of nearly two hundred billion dollars after the war in Ukraine led to a rise in oil prices. Experts believe that the recovery of China’s demand for oil will be in the interest of increasing corporate profits.
At the height of the Corona pandemic, specifically in April 2020, the shock occurred in oil prices, with their collapse in an unprecedented scene, due to the decrease in energy demand after the countries of the world imposed closures to prevent the spread of the pandemic. As a result, the price of US crude oil fell to $30 (less than €28) per barrel.
That collapse in oil prices prompted many to speculate that the days of oil companies making huge profits are over, which means the end of the hydrocarbon era is near.
However, it turned out to be contrary to expectations, as the five largest Western oil and gas companies – Exxon Mobil, BP, Chevron, Shell and Total – reported annual profits of more than $ 196 billion on the back of High demand for oil because of The war in Ukraine and economic recovery after a pandemic corona . This comes despite the fact that these companies incurred huge losses during the year 2020.
During the first half of last year, the oil price exceeded the $100 threshold, while the price of Brent crude in March reached $139 a barrel. Oil prices stabilized during the rest of the year between $70 and $95, which exceeds the needs of major oil companies to achieve profits.
As a result, Exxon Mobil achieved record profits during the past year, and it was not limited to it, as it was joined by another Western company such as British Petroleum, which achieved profits amounting to $ 28 billion, in the largest gains achieved by the company throughout its history that spans more than a hundred years.
Over the past year, Shell has more than doubled the profits it made in 2021.
The decline in global debt levels also contributed to the increase Profits of major oil companies Which gave her room to increase spending on oil projects And gas, as governments around the world have given priority to achieving energy security to overcome the repercussions of Western sanctions on Russia.
Bernard Looney, chief executive of BP, came under fire from environmental organizations when he said he wanted to “cut back” the company’s investment in renewable energy because of the risk of oil and gas shortages leading to more volatility in energy prices.
Britain and the European Union imposed temporary taxes on the profits of oil and gas companies
Angered by the huge profits
But public anger over oil companies’ huge profits is not only due to the urgent need to accelerate the transition to green energy.
During the past year, many households and companies have borne difficult economic burdens due to the rise in energy prices, while many governments have tried to limit this damage by providing subsidies to affected families and companies.
However, on the other hand, many believe that the major oil companies have benefited from this difficult situation, which has sparked calls for the necessity of imposing greater taxes on the profits of oil companies.
In this context, Britain and the European Union imposed temporary taxes on the profits of oil and gas companies, amid calls for increase these taxes While Shell, Total and British Petroleum revealed that the new taxes will cost them about two billion dollars, which constitutes a percentage ranging between 5% and 8% of the profits.
In its response, ExxonMobil intends to file a lawsuit against the European Union to push the conglomerate to cancel plans to impose sudden taxes on profits, while the company asserts that the European Union exceeded its powers by imposing taxes that supposedly European governments are entrusted with this measure.
A spokesman for the company said that the new tax system – although it is temporary – but it will undermine investor confidence and reduce the pace of investment, which will increase Europe’s dependence on imported energy.
Biden attacks major oil companies
In his State of the Union address to Congress, he called on the US President joe biden To put pressure on major oil companies, proposing to quadruple taxes on corporate stock buybacks.
“When I spoke to two companies from… [شركات الطاقة]The response was: “We are afraid that all oil refineries will shut down anyway, so why invest in them?”
Biden stressed that the United States will need oil for at least another decade, saying, “These companies are using their record profits to buy back their own shares and offer bonuses to executives and shareholders, so companies must do the right thing.”.”
According to Reuters, major Western oil companies have spent more than $110 billion on dividend payments and share buybacks for investors in 2022 at an unprecedented record rate..
It is noteworthy that the major oil companies have reduced their long-term investments in recent years, whether due to the collapse of the shale oil sector in the United States in the past decade and their incurring large losses during the pandemic..
In light of the uncertainty of the future of fossil energy due to the transition to green energy, there are still reservations by oil companies about the huge capital expenditure..
China’s energy demand rebound
However, the recovery of China’s energy demand may be in the interest of oil companies, especially since it is expected that China will open its doors after imposing restrictions and closures over the past three years during the Corona pandemic.
Although it is not expected that oil prices will reach their highest level in July 2008 when the price of a barrel reached $150 at the time, some analysts expect the price of a barrel to reach $100 again during the current year.
In the Oxford Institute for Energy Studies’ latest forecast, the institute said last Tuesday that oil prices will reach $95.7 a barrel, in part due to Great demand for energy From Asian countries, Goldman Sachs expects prices to return to $100 a barrel by December.
And Russia announced a few days ago that it plans to reduce its production by half a million barrels per day, starting next month, in a move that would lead to a rise in oil prices, while Moscow blamed the Western countries that imposed sanctions on them, including The European Union sets a $60 ceiling for the price of a barrel of Russian oil
It is noteworthy that Russia has diverted oil shipments that it was sending to Europe towards China and India at a 30 percent discount.
In another indication of the increase in demand for oil, Barclays Capital revealed this week that major oil companies will achieve large profits, with expectations that the share price of BP will reach ten pounds, equivalent to $ 12, double its price last Friday, which amounted to 5.61 pounds. .
Nick Martin/M. p
