Centrica, the UK energy group, joins a wave of energy giants announcing record earnings with a 2022 EBITDA* of almost £4bn ($4.8bn).
The owner of UK utility British Gas reported a total group operating profit of nearly £3.3bn, with the majority of profits coming from its nuclear, oil and gas business. This is more than triple the £948m in operating profits that the company made overall last year.
Energy companies experienced extreme growth in 2022 following Russia’s invasion of Ukraine and the subsequent scarcity of energy supply. This also came after a period of suppressed growth as energy consumption fell during Covid lockdowns.
For Chevron, ExxonMobil, BP, Shell and TotalEnergies, profits soared to total almost $200bn in 2022, including, with many of them setting new records. ExxonMobil recorded the largest profits to date from any Western oil company at $59.1bn, and Shell recorded the largest annual profits in its 115-year history at $39.9bn.
A large proportion of the annual profits likely comes from the sale of Spirit Energy’s Norwegian assets by the company to Norwegian company Sval Energi in May. Centrica cited a reduction in ties to carbon-intensive oil and gas exploration and production as its reasoning for the $1.1bn sale.
Prior to the acquisition, Spirit Energy’s daily output from the Statfjord area was around 21,000 barrels of oil equivalent per day in the third quarter.
Many politicians and charities in Europe have called for higher taxation of these companies as profits soar above average rates. Centrica states that it paid approximately £1bn in tax in the UK in 2022 amid efforts to “[help] customers and communities through the energy crisis” currently taking place across Europe.
Some of this tax payment came as the result of the UK government’s Energy Profit Levy. The tax, introduced in May of last year, requires energy companies to pay an extra 25% on their profits from production on the UK continental shelf.
This news follows recent controversy relating to the compulsory fitting of energy prepayment meters in the homes of vulnerable people, which in some cases required forced access. Court warrants by Arvato Financial Solutions, contracted by British Gas, were found in an investigation by the Times. Their use to break into vulnerable people’s homes violated regulatory guidelines.
British gas contributed £72m of Centrica’s total profits. The company said: “We invested £75m in supporting our energy customers in 2022, which was greater than the £8 post-tax profit-per-customer earned by British Gas Energy.”
*EBITDA stands for earnings before interest, taxes, depreciation and amortization.