Fuel producers making massive profits during Britain’s fuel price crisis is plainly not a great look, so it is unsurprising that there’s been a chorus of calls for higher taxes on the likes of BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL, EURONEXT:SHELL) – even though most of their profits are made ‘abroad’.
Both companies have long British and European heritage, and they’re domiciled and listed in Blightly – but operationally they span the globe, with only a comparatively small portion of domestic business.
Technically, BP is nowadays a two-letter logo representing a multinational oil company rather than a 'British Petroleum'.
Nevertheless, alongside the hard financial facts in today’s fourth quarter results, BP updated stakeholders on its ESG-led strategy to achieve 'net zero' and at the same time appeared to put particular effort into pitching a seemingly UK-centric investment plan.
BP said it will invest “more than double the profit it generates in the UK” until the middle of the decade.
It highlighted that it is helping to create hydrocarbon value chains in the UK and that it will help create new “electron and hydrogen value chains”.
More specifically, it says it is investing in offshore wind in the Irish Sea and off the coast of Scotland along with solar projects across the UK. In Teeside and Scotland it is manufacturing green and blue hydrogen, plus biofuels.
BP also says it will continue to grow what it described as the UK’s market-leading electric vehicle charging network.
“Britain has been our home for more than 110 years and we are excited to help as it transitions to a thriving net zero economy,” chief executive Bernard Looney said in the statement.
How much traction BP finds with its ‘investing in Britain’ pitch and whether it's enough to stave off the more tenacious campaigners for windfall taxes remains to be seen.
Russ Mould, investment director at AJ Bell, said with the results following those from Shell last week, “both companies probably wished the timing didn’t coincide with the rise in the UK energy price cap which piles pressure on households already facing a cost of living crisis”.
While the UK government has ruled out a windfall tax for the oil and gas sector for now, Mould said the threat of a legislative intervention “hangs in the air given the contrast between voters struggling to heat their homes and two of Britain’s biggest companies announcing such strong results and billions in giveaways to shareholders”.
He added that the fact that a large portion of this investment will be concentrated in the UK “could be seen as an attempt to head off the calls for a one-off levy on profits” and said it “will be interesting to watch, if oil prices remain elevated for an extended period of time, is whether there might be some mission creep in BP’s move to decarbonise as the economics of oil and gas projects become just too attractive to ignore.”
BP’s strategy missive also noted that its investment approach is not limited to the UK, and it is applying its new integrated energy company model in many other geographies around the world.