BP reports soaring profits amid calls for windfall tax

LONDON, May 3 (Xinhua) -- Oil giant BP reported Tuesday that its underlying profit for the first quarter of this year saw a huge increase to 6.2 billion U.S. dollars, fueling discussions about a windfall tax on energy companies.

The company's profit was 2.6 billion dollars during the first three months of 2021, and 4.1 billion in the fourth quarter of last year. BP said this year's increase was driven by exceptional oil and gas trading, higher oil realizations and a stronger refining result.

Also on Tuesday, BP announced that it intends to invest up to 18 billion pounds in Britain's energy system by the end of 2030, and to continue investing in North Sea oil and gas. The energy giant also anticipates paying up to 1 billion pounds in taxes for its 2022 North Sea profits.

BP's bumper earnings came alongside an ongoing argument in Britain over whether a one-off tax should be levied by the government on North Sea oil and gas companies, which have enjoyed a bonanza due to surging energy prices.

"With oil and gas prices at elevated levels, and energy companies enjoying an unexpected windfall in terms of higher profits, politicians have been responding to populist pressure to impose windfall taxes to help ease the rising cost of living," said Michael Hewson of the London-based financial services company CMC Markets.

However, BP has rejected the idea, saying earlier this year that a windfall tax on British oil and gas producers would not encourage investment in the country's gas resources.

Meanwhile, the government has sent mixed signals; while Chancellor of the Exchequer Rishi Sunak said last week that a levy was not off the table, Prime Minister Boris Johnson said Tuesday that taxing energy companies would discourage them from making investments.

With raging inflation and a sky-rocketing cost of living in the country, discussions over how to resolve these issues have been central to the government's agenda. Britain's Consumer Price Index rose by 7 percent in March, hitting a new 30-year high. It is expected to surge further, mainly due to a much higher energy price cap since April.

"BP's first quarter results will do nothing to quell talk of a windfall tax on oil and gas companies," said Russ Mould, investment director with the British online investment platform AJ Bell.

Noting BP's plans to invest in projects to boost Britain's energy security, Mould said: "Whether this will be enough to stave off a new levy remains to be seen. The political pressure to do so is only likely to escalate as the cost of living continues to surge in the UK."