LONDON: British energy giant BP said today that its decision to pull out of Russia as a result of the war in Ukraine pushed it deep into the red in the first three months of this year.
BP said in a statement that it booked its biggest-ever quarterly net loss of US$20.4 billion (RM88.74 billion) in the period from January to March, compared with profit of US$4.7 billion a year earlier.
Revenue jumped 40% to US$51 billion in the three-month period as the war fuels a rise in oil and gas prices.
There have been repeated calls in Britain for a windfall tax on energy majors as consumers endure a cost-of-living crisis caused by the highest rate of inflation in decades, also as economies reopen from pandemic lockdowns.
BP booked a pre-tax charge of US$25.5 billion after pulling its 19.75% stake in energy group Rosneft, ending more than three decades of investment in Russia.
The 2022 first quarter performance was driven by what BP said was an “exceptional” performance in its oil and gas trading division. Chief financial officer Murray Auchincloss said volatility in oil and gas prices was most company had seen.
BP's refined oil products unit made a profit of US$1.6 billion in the first three months, compared with a loss of US$26 million in the previous quarter and a US$2 million loss a year ago.
“Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss,” chief executive Bernard Looney said.
That wiped out the positive effect of surging energy prices, driven by concerns of tight supplies following the invasion by major oil and gas producer Russia.
However, at an underlying level, rocketing energy prices enabled BP to record its best three-month performance since 2008 with profit of US$6.2 billion.
Looney said that “in a quarter dominated by the tragic events in Ukraine and volatility in energy markets, BP’s focus has been on supplying the reliable energy our customers need”.
BP also unveiled plans to invest up to £18 billion (RM98.28 billion) in green and fossil fuel operations in the UK by the end of the decade.
While Looney said BP was “fully committed to the UK’s energy transition” to net zero, the company “intends to continue investing in North Sea oil and gas” amid Britain’s near-term energy security needs in the wake of the Ukraine war.
“We’re backing Britain,” Looney said.
“It’s been our home for over 110 years, and we’ve been investing in North Sea oil and gas for more than 50 years.”
In the North Sea, BP plans to develop “lower emission oil and gas projects to support near term security of supply”.
The company has also proposed new offshore wind projects and plans for hydrogen production facilities.
Despite the massive first-quarter loss, BP’s share price jumped 2.9% to 403 pence in morning trade on London's FTSE 100 index, which was down overall.
Investors welcomed BP's announcement that it will repurchase US$2.5 billion in shares.
BP said it would increase its quarterly share repurchases to US$2.5 billion before the end of the second quarter after its surplus cash flow rose to more than US$4 billion.
BP said in February it would accelerate its share buybacks to US$1.5 billion per quarter from US$1.25 billion.
BP previously said it would repurchase US$4 billion a year at oil prices of $60 per barrel, well below the current price of benchmark Brent, which was about US$107 today.
The company maintained its dividend at 5.46 cents per share.
BP's net debt declined sharply to UA$27.5 billion from US$30.6 billion at the end of 2021.
“The exit from Russia, while bringing with it considerable costs, arguably helps with the transformation of the group and strong cash flow is helping to bring down debt,” said AJ Bell investment director Russ Mould.
“BP has ambitious plans to become cleaner and greener but today’s update is a reminder that fossil fuels, with all the environmental and geopolitical mess they entail, remain central to the company for now.”
In another development, Mexican state energy giant Pemex reported a US$6 billion profit for the first quarter of 2022 on the back of higher oil prices.
The net profit of 122.5 billion pesos for the three months to March compared with a loss of 37.4 billion pesos in the same period of 2021.
The group lost around US$23 billion in 2020 as it joined other oil firms worldwide hit by an economic slump that caused oil prices to briefly turn negative for the first time.
But with energy prices since driven higher by rising demand and supply concerns fuelled by Russia's invasion of Ukraine, Pemex said its first-quarter revenue rose nearly 60% from a year earlier, to 506.8 billion pesos. – AFP, Reuters