BP profits soar amid increasing calls for bigger UK windfall tax

BP has joined other oil and gas majors in reporting a year/year surge in profits in the third quarter on the back of higher oil and gas prices, but the result has further spurred calls for the UK to expand its windfall tax on the industry's earnings.

The London-based company earned $8.2bn in underlying replacement cost profit in the three-month period, which was almost double its result in the same quarter of last year. But it was down from $8.45bn in the second quarter of this year, with BP attributing the drop to weaker refining margins and lower liquids realisations, partly offset by stellar gas marketing and trading performance and higher gas realisations. Operating cash flow grew to $8.3bn, up from $6bn, while surplus cash flow increased to $3.5bn, from $933mn.

"This quarter's results reflect us continuing to perform while transforming," BP CEO Bernard Looney said in a statement. "We remain focused on helping to solve the energy trilemma – secure, affordable and lower carbon energy. We're providing the oil and gas the world needs today – while at the same time – investing to accelerate the energy transition."

He pointed to BP's $3.3bn purchase last month of leading renewable natural gas (RNG) producer Archaea Energy as evidence of this commitment to transition. Archaea operates 50 RNG and landfill gas-to-energy facilities in the US with average production of 6,000 barrels of oil equivalent/day. The acquisition is due to be completed by the end of this year.

Soaring profits by BP and other oil and gas producers like Shell have sparked growing calls for the UK government to expand a windfall tax that was imposed earlier this year by prime minister Boris Johnson's administration. New prime minister Rishi Sunak and chancellor Jeremy Hunt are considering an expansion of the tax, from 25% to 30%, UK newspaper The Times reported on October 30.

Ed Miliband, shadow change secretary in the opposition Labour party, described BP's soaring profits as "damning evidence of the failure of the government to levy a proper windfall tax."

"Rishi Sunak should be hanging his head in shame that he has left billions of windfall profits in the pockets of oil and gas companies, while the British people face a cost-of-living crisis," he said.

Others in the ruling Conservative party, including UK COP president and former business secretary Alok Sharma, also urged an increase, tweeting that "we need to raise more money from a windfall tax on oil and gas companies and actively encourage them to invest in renewables."