By Greg Wright

Published 7th Feb 2023, 08:42 BST

The company also said that it had slashed its emissions reduction targets by a third, and will produce much more oil and gas by the end of this decade than previously anticipated.

BP said that underlying replacement cost profit – the figure most widely cited by analysts – had reached 27.7bn dollars (£23bn) last year.

It came just days after Shell reported its highest profit on record at nearly 40bn dollars (£33bn).

The sign for a BP filling station Spekehall Road in Liverpool, Merseyside. Profits hit record highs at the oil giant BP last year as the business benefited from runaway oil and gas prices caused by the war in Ukraine. Picture date: Tuesday February 7, 2023.

Unions and pressure groups voiced outrage that BP is making enormous profits while ordinary people struggle to afford the energy it sells. Perhaps more significantly in the long term, BP slashed its environmental targets on Tuesday.

The company had been one of the first oil and gas majors in the world to announce an ambition to cut emissions to net zero by 2050. As part of this it has previously promised that emissions will be 35 per cent to 40 per cent lower by the end of this decade.

However, on Tuesday the company said that it was significantly revising this target. Instead it is targeting a 20 per cent to 30 per cent cut.

Boss Bernard Looney said it was about investing in both the transition and the energy that is needed today as he announced an extra 8bn dollars (£6.6bn) for oil and gas investment by 2030 and another 8bn dollars for transition projects.

“With today’s announcement we are leaning further in,” he said.

“We are growing our investment into our transition and, at the same time, growing investment into today’s energy system.

BP said that it now plans to cut oil and gas production by just 25 per cent by the end of 2030 when compared with 2019. The previous target had been a 40 per cent cut.

BP said its underlying replacement cost profit was slightly lower in the last three months of the year compared to previous quarters at 4.8bn dollars (£4bn).

BP said that the fourth quarter result had been affected by its gas marketing division, which saw below average results after an exceptional third quarter.

Richard Hunter, Head of Markets at interactive investor, commented: “The financial pain of the pandemic has now been firmly consigned to the history books, as BP joins the throng of oil majors reporting bumper annual profits.

“The preferred measure, underlying replacement cost profit, came in at $27.7bn, compared to $12.8bn the previous year. Fourth quarter profits were slightly shy of expectations at $4.8bn, but this did little to mar the overall result.

“Such cash generation has enabled BP to put the cash to good use, in paying down debt, continuing to invest in the business including renewables and increasing shareholder returns. Such immense profits have also enabled BP to withstand the major financial cost of its Russian exit as it steps away from Rosneft, as well as deploying excess capital and at the same time actually providing an upgrade to its earnings guidance for the forthcoming year. The results also underline the cyclical nature of the business and in particular that when times are good, they are very good indeed.”

BP delivers record profits on the back of soaring oil and gas prices