Shell profits plunge last year from a record high as oil and natural gas prices drop

Oil giant Shell saw profits tumble by nearly a third in 2023 as a result of lower oil and gas prices, which had surged the year before in the wake of Russia’s invasion of Ukraine

Britain Shell Earns (Copyright 2023 The Associated Press. All rights reserved)

Oil giant Shell saw profits tumble by nearly a third in 2023 as a result of lower oil and natural gas prices, which had surged the year before in the wake of Russia's invasion of Ukraine.

In a statement Thursday, London-based Shell said its post-tax earnings fell 29%, to $28.3 billion from the previous year's all-time high of $40 billion.

The main reason behind the decline was the fall in energy prices, with oil trading at an average of $82 a barrel against $100 the year before.

Shell CEO Wael Sawan said the company had “made good progress” over the year and that it would focus on “more value with less emissions."

Shell's green credentials, which have been under fire over the past year, were in focus again Thursday as Greenpeace activists protested outside the company's London headquarters dressed as partying Shell board members.

Greenpeace campaigners said the oil group should pay some of its profits into a fund agreed at U.N. climate talks in December to help pay for loss and damage caused by climate change.

Last year, Shell effectively abandoned one of its green pledges, which was to cut oil production by 1% to 2% each year until the end of the decade, saying it had already met the goal.

But this was largely as a result of it selling off some oil and natural gas fields, which meant the company’s production was already lower than it would have been in 2030 under the old plan.

On Thursday, Shell said it was “progressing towards its goal of achieving net-zero emissions by 2050” and would give an update on its energy transition strategy on March 14.

Shell and the wider oil and gas sector also are under pressure to pay more in taxes on windfall profits as households have struggled during a cost-of-living crisis driven by higher energy costs.

Elsewhere, Shell said it is less affected by attacks on vessels in the Red Sea by Yemen’s Houthi rebels, which have prompted many companies to divert shipments away from the major global trade route, including British oil rival BP.

Shell's chief financial officer, Sinead Gorman, said the firm was making decisions about the route on an “hour by hour” basis but that the safety of its workers and ships was of “paramount importance.” She said alternative routes added 10 to 15 days to journeys.

Shell also raised its dividend by 4% and is starting a $3.5 billion share buyback program.