Oil majors hit record profits, green investments tell a different story

Some of the world’s largest oil and gas companies have declared the highest-ever profits since people started using petroleum, rewarding shareholders with higher dividends and share buybacks while spending relatively little of it on renewable energy, BusinessDay’s findings show.

ExxonMobil, Chevron, Shell and ConocoPhillips all reported record profits in 2022, a year in which Russia’s war on Ukraine collided with the post-pandemic economic recovery to drive oil prices to their highest levels in history.

These oil majors have each pledged to become green businesses over the next three decades but are still investing only a fraction of their capital in renewable energy.

Exxon, the largest US oil producer, was silent about 2023 renewable energy investments despite reporting an epic $55.7 billion in profits for 2022. The record exceeded its 2008 high watermark of $45.22 billion.

The oil giant’s bottom line “clearly benefited from a favourable market,” CEO Darren Woods told investors. He also touted Exxon’s investments before and during the pandemic, which allowed it to increase production as demand was ramping up.

“We leaned in when others leaned out, bucking conventional wisdom,” Woods said.

The windfall makes Exxon the third-most-profitable company of 2022, behind only Apple and Microsoft, according to the Wall Street Journal.

Chevron also posted a record $36.5 billion profit for 2022 exceeding its previous record set in 2011 by about $10 billion.

Shareholder rewards will continue to be the top priority for cash, Chevron officials said.

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Chevron last year paid out $26 billion via dividends and buybacks to shareholders and invested $15.7 billion in operations.

“We can do it all,” finance chief Pierre Breber told Reuters in an interview. After providing for shareholder dividends, Chevron will allocate cash to production and repaying debt, with share buybacks a fourth priority.

“I’m going to keep doing what we have been doing, year in and year out,” he said.

This year, Chevron says it will increase project expenditure to $17 billion, with two-thirds of outlays in the United States, where oil and gas output was up 4 percent over 2021.

It left global oil and gas production guidance for this year at flat to up 3 percent.

Apart from US companies, Shell also attained a new earnings record. It reported just under $40 billion for 2022. It bested its previous best by over $11 billion. The company’s 2022 profit was double that of 2021 and the highest in its 115 years of existence.

Findings showed Shell paid out more than £5 billion to shareholders in the fourth quarter of 2022, as much as five times more than what it labels investments in renewables and energy solutions.

An analysis from London-based energy and climate think-tank InfluenceMap found that the amount of climate-positive messaging used by five major oil and gas companies – BP, Chevron, ExxonMobil, Shell, and TotalEnergies – is inconsistent with their spending on low-carbon activities.

The think tank analyzed 3,421 items of public communications materials across the five companies and found that 60percent of their messaging contained at least one “green” claim.

It appears to be part of a “systematic campaign to portray themselves as pro-climate to the public,” InfluenceMap program manager Faye Holder told CNBC. “In the meantime, what we see is a continued investment into this unsustainable energy system – predominantly for fossil fuels.”

The report noted that InfluenceMap “found evidence of each company, with the exception of TotalEnergies, engaging policymakers directly to advocate for policies encouraging the development of new oil and gas in 2021-22.”