Daily Telegraph (UK): Shell's huge profit fuels calls for windfall tax: “Yesterday Shell increased its "lost" reserves again for what it hoped would be the fifth and final time” (ShellNews.net) Posted 5 Feb 05
By Christopher Hope and George Jones
(Filed: 04/02/2005)
Shell yesterday posted the biggest annual profit figure made by a British company. The figure, which works out at more than £1 million an hour, prompted critics to call for the Government to impose a windfall tax on oil companies' profits.
The Anglo-Dutch oil and gas multi-national's profits of $17.59 billion (£9.31 billion) last year were up by more than one third on 2003's figure and comfortably outstripped the previous record for a British company of £7.7 billion, set by the banking giant HSBC last year.
The profits jump is expected to be mirrored by rival BP next week, although neither British company can match the $25 billion (£13.2 billion) generated by America's ExxonMobil earlier this week.
Tony Woodley, the general secretary of the Transport and General Workers Union, called the profits "more than excessive" and "obscene".
He added: "With our pensions in crisis, these profits are 9.3 billion extra reasons for a windfall tax. There are massive profits being made in the oil and banking sectors. The Government should grasp the nettle so everyone can benefit."
Martin O'Neill, the chairman of the Commons' trade and industry select committee, said a windfall tax on profits made in the UK should be considered and Shell should be "encouraged" to invest more of the money in community.
However, Malcolm Brinded, a Shell executive, said: "We are one of the few companies which has a large UK shareholder base which is globally successful. The UK economy benefits from that, it benefits from employment, it benefits from taxes and it benefits from dividend flow."
Mr Brinded said Britain was still a "top five" territory for Shell but was of declining importance because of the maturity of the North Sea. Only 950 of Shell's 40,000 petrol stations were in Britain.
Any windfall tax would threaten directly the "quarter of a million jobs in the UK dependent on continued investment in the North Sea", including 80,000 employed by Shell in Britain, he said.
"It will knock confidence, investment, and damage both the business and the interest in terms of fiscal income of the UK," said Mr Brinded.
The Government said it "had no plans to introduce a windfall tax".
John Healey, the economic secretary to the Treasury, said companies should "pay a proper price" for the right to make money from the North Sea. He said: "When profits and prices are high, oil companies pay more tax."
The Treasury expects to receive close to £24 billion in tax from forecourt sales of petrol and diesel this year, and £6 billion in North Sea taxes alone. Last year, as a result of high oil prices, Gordon Brown, the Chancellor, decided to forgo an annual, inflation-linked uprating in petrol and diesel duty. He will today call for international action to bring about lower and more stable oil prices.
Jeroen van der Veer, Shell's chief executive, said large profits for big oil and gas companies were a natural function of the high oil price, which averaged $36.60 a barrel last year compared with $27.50 in 2003.
The scale of its profit rounded off a horrendous year for Shell in which its top three directors quit after the company disclosed that it had over-estimated its proven oil and gas reserves by more than a third. Yesterday Shell increased its "lost" reserves again for what it hoped would be the fifth and final time.
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