Energy giant Shell has reported its highest quarterly profit ever, as oil and gas prices soared worldwide.
Shell made $ 9.13 billion (£ 7.3 billion) in the first three months of this year, almost three times the $ 3.2 billion it reported for the same period last year.
But the company said stopping investment in Russian oil and gas due to the conflict in Ukraine cost him $ 3.9 billion (£ 3.1 billion).
On Tuesday, rival BP also reported a sharp rise in profits, but the UK has so far ruled out a windfall tax.
The Russian invasion of Ukraine helped to raise oil and gas prices. Russia is one of the world’s largest oil exporters, but Western countries have undertaken to reduce their dependence on Russian energy sources.
Oil prices had already risen in Ukraine before the war, as world economies began to recover from the coronavirus pandemic.
Ben van Beurden, Shell’s chief executive, said the war in Ukraine had caused “significant disruption to global energy markets”.
“The consequences of this uncertainty, and the high costs associated with it, are widely felt,” he added.
“We work with governments, our customers and suppliers to overcome difficult impacts and provide support and solutions where possible,” he continued.
Shell’s competitors, including BP and Total Energy, also reported a sharp rise in profits.
Norway’s Equinor, which supplies the UK with a quarter of its gas needs, also posted record profits on Wednesday.
Cost of living
Rising oil and gas prices have raised the cost of living around the world.
In the UK, inflation reached 7 per cent, the highest rate in 30 years, as energy bills, fuel costs and food prices rose dramatically.
The Bank of England (the UK’s central bank) will release interest rates on Thursday, with speculation that it will increase borrowing costs to curb inflation.
One of the main causes of inflation in the UK was fuel prices, which are close to record levels and could remain so for months, according to some analysts.
Diesel demand grew as online shopping continued to rise, and inventory declined in the United States and Europe.
Russia is a major exporter of diesel, but the invasion of Ukraine has limited access to it.
What is Shell going to do with all this money?
Simon Jack, the BBC’s business editor, says Shell’s profits are expected to be huge.
He notes that oil and gas prices, which were already high at the end of last year, continued to rise after the Russian invasion of Ukraine threatened to disrupt one of the world’s largest energy suppliers and eventually boycott it.
But the figures Shell announced exceeded those high expectations, says Jack, who says the question now is: What is Shell going to do with all this money?
He added: “The company paid £ 4.3 billion to shareholders in the last quarter of last year, including millions in pension savings, and said it plans to spend about the same amount over the next three months.”
He goes on to say: “Shell has already said it will invest £ 20-25 billion in the UK over the next decade in low-carbon energy and UK oil and gas supplies.”
Jack indicated that Cabinet would closely monitor the situation to ensure that Shell would meet these obligations.
Shell had earlier announced that it would terminate all its joint ventures with Russian energy company Gazprom, in response to the invasion of Ukraine.
This will include Shell selling its 27.5 per cent stake in a large liquefied natural gas plant, and a 50 per cent stake in two Siberian oilfield projects.
It will also halt its participation in the Nord Stream 2 pipeline between Russia and Germany. The German cabinet has already decided to suspend the 1,200-kilometer pipeline under the Baltic Sea.
Shell said it expected the cost of stopping its participation in Nord Stream to be around $ 3 billion, and that its decision would also apply to any “related entities” of Gazprom.
Other companies have followed in Shell’s footsteps, including Britain’s BP, which has already announced it will divest its $ 25 billion stake in Russian state-owned oil giant Rosneft.
And European Commission President Ursula von der Leyen recently announced a sixth package of sanctions against Russia, including a ban on Russian oil imports from the end of this year.
Von der Leyen addressed the European Parliament and said the step would be implemented in phases.
The aim, she added, is to put maximum pressure on Moscow, while minimizing the impact on the European Union and global energy markets.
It is believed that Slovakia and Hungary – which are particularly dependent on Russian energy supplies – may be given more time to enforce the embargo.