Oil, gas majors post sliding profits on weaker prices

Oil, gas majors post sliding profits on weaker prices
by AFP Staff Writers
London (AFP) July 27, 2023

Shell joined other energy majors Thursday in posting sliding profits after oil and gas prices weakened from peaks reached in the wake of Russia's invasion of Ukraine.

Energy prices had soared a year ago following the key producer's invasion, sending global inflation to the highest levels in decades and providing record profits for oil and gas companies.

Gas and oil prices have since pulled back but remain at elevated levels, prolonging a cost-of-living crisis.

British giant Shell on Thursday said its profit after tax came in at $3.13 billion in the second quarter, down 80 percent compared with the April-June period a year earlier.

"Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment," chief executive Wael Sawan said in an earnings statement.

Despite the drop in profits, caused also by lower gas sales, Shell said it would return $3 billion to shareholders.

- Sector-wide falls -

Elsewhere Thursday, French group TotalEnergies said its net profit dropped 28 percent to $4.1 billion in the second quarter from a year earlier.

"In a favourable but softening oil and gas environment TotalEnergies once again delivered this quarter robust results, strong cash flow, and attractive shareholder distribution," chief executive Patrick Pouyanne said in an earnings statement.

The share price of Shell was down around one percent, while TotalEnergies grew 0.6 percent, following the earnings updates.

Spain's Repsol also posted a sharp drop in net profits on Thursday, a day after similar results reported by Norwegian state-owned energy company Equinor.

"The impact of the sharp falls in oil and gas prices was laid bare... and with BP results next week this is likely to be a familiar theme," noted Michael Hewson, chief market analyst at CMC Markets UK.

Gas prices had soared last year after Russia cut gas shipments to Europe while oil markets were also rocked by supply concerns.

But natural gas prices fell sharply as European countries found new suppliers, built up reserves and experienced a mild winter.

Oil prices have also tumbled, partly on fears of falling demand as the global economy slows, with major consumer China's post-Covid recovery stumbling.

Profits remain large, however, as oil and gas firms pivot toward cleaner energy and away from fossil fuels.

Repsol's net profit slumped 44 percent in the first half on falling energy prices but also owing to investments in low-carbon projects, it said.

- Greenpeace protest -

Campaigners, however, accuse fossil-fuel producers of "greenwashing", or marketing operations as climate-friendly.

Outside Shell's London headquarters on Thursday, Greenpeace protested against the company's big profits, "while devastating wildfires linked to climate change are causing devastation" across the globe.

A British court this week dismissed a lawsuit that accused Shell's leadership of mismanaging climate risks to the oil giant.

ClientEarth, an environmental law NGO and a minor Shell shareholder, plans to appeal the ruling handed down by the High Court of England and Wales.

Corporations have faced a growing number of climate-related lawsuits in recent years as they come under pressure to step up efforts to curb global warming.

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