Shell makes nearly £1.4bn more than expected in opening quarter

Oil giant Shell made nearly 1.7 billion dollars (£1.4 billion) more in profit than experts had expected in the first three months of the year, the company said on Thursday.

The business joined its rival BP in reporting expectations-beating results this week.

Shell said its adjusted earnings had risen by 5.7% compared with the same quarter a year earlier, reaching 9.6 billion dollars (£7.6 billion).

The business said that, compared with the last three months of 2022, it had faced unfavourable tax movements, and the price it was able to sell oil and gas at dropped.

However, Shell said it had managed to offset some of this through cutting operating expenses and a rise in its chemicals and products trading business.

The company said it had decreased production slightly compared with a year ago, to 2.9 million barrels of oil equivalent per day. Revenue rose 3.3% to just under 87 billion dollars (£69 billion).

It also announced plans to buy back shares worth four billion dollars (£3.2 billion) from investors over the next three months to return cash to its owners.

On completion, the company will have distributed around 12 billion dollars (£9.6 billion) to its shareholders in the first six months of 2023.

Chief executive Wael Sawan said: “In Q1 Shell delivered strong results and robust operational performance against a backdrop of ongoing volatility, while continuing to deliver vital supplies of secure energy.

“We will commence a 4 billion dollar share buyback programme for the next three months as part of our commitment to deliver attractive shareholder returns.”

Separately on Thursday, Norway’s state oil giant, Equinor, revealed a 33% drop in adjusted earnings, to 12 billion dollars (£9.6 billion), ahead of the 11.2 billion dollars (£8.9 billion) expected.

Like its rival BP, Shell’s results immediately sparked calls for the Government to take a tougher stance against the oil majors.

Shadow chancellor Rachel Reeves said: “Shell reports £7.6 billion profits for its first quarter, yet the Tories refuse to bring in a proper windfall tax on oil and gas giants to freeze council tax this year, as Labour would.

“We’ll tackle the cost-of-living crisis, and put working people first.”

Liberal Democrat leader Sir Ed Davey called on the Government to close the “loopholes” in the windfall tax which allow companies to offset their investments in the North Sea against tax.

“Shell’s latest profits once again demonstrate the urgent need for a robust windfall tax on big energy companies,” he said.

“Rishi Sunak’s refusal to close windfall loopholes for big energy companies shows just how out of touch this Conservative Government is with the struggles that families are facing right now.”

Alexander Kirk, a campaigner at Global Witness, said: “Despite the glaringly obvious inequality at the heart of our energy system, the Government appears to be making the same mistakes all over again.

“The simple truth is that the windfall tax has not worked and new evidence has shown that, through loopholes in the UK’s tax regime, UK taxpayers are handing oil and gas companies billions extra in tax rebates.”