From Russia with losses: BP counts the cost of Rosneft exit amid escalating windfall tax row
BP’s decision to pull out of its Russian holdings after the Kremlin’s invasion of Ukraine has blown a £20bn hole in its first quarter finances, the firm told markets yesterday.
The energy giant reported a statutory loss of £16.3bn for the first quarter as a result of the writedown.
But the group’s underlying profit of £4.9bn was the strongest figure in more than a decade off the back of rising energy prices, triggering debate around a potential ‘windfall tax.’
Fossil fuel trading has powered its recovery from painful pandemic-driven losses of £5.7bn in its 2020 full-year results.
Labour leader Keir Starmer yesterday repeated his call for a one-off levy on the North Sea oil and gas industry.
The country is grappling with an escalating cost of living crisis, which has seen domestic energy bills spike to nearly £2,000 per year, with expectations of a further hike this autumn, putting more pressure on households.
However, Prime Minister Boris Johnson remains opposed to further levies, concerned it could deter crucial investment in the North Sea.
“If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody,” the Prime Minister told ITV as BP’s balance sheet became a political hot topic.
Oil and gas exploration remains essential to Downing Street’s plans to bolster the UK’s energy independence and reduce its reliance on Russian supplies.
BP has committed to spending £18bn on boosting the country’s energy sector by the end of the decade, with a focus on low carbon and zero carbon projects alongside North Sea oil and gas exploration.
However, the firm has received criticism from analysts for increasing the size of its share buyback programme rather than adding to its investment plans.
Chief executive Bernard Looney said: “We’re backing Britain. It’s been our home for over 110 years.”
Rival energy firm Shell is set to unveil its first quarterly update later this week.