Shell has reported its second highest quarterly profit on record but it has not paid the UK’s windfall tax on energy firms.
The energy giant said global profits reached $9.5bn (£8.2bn) between July and September, compared to $4.2bn during the same period last year.
However, Shell said that because it had made large investments in the UK, it meant it had made no profit here.
It also does not expect to start paying windfall taxes until early next year.
The Energy Price Levy – or windfall tax – on the profits of energy firms was announced by Rishi Sunak in May, when he was chancellor. At the time he said it would raise £5bn in its first year.
Oil and gas prices began to rise after the end of Covid lockdowns but have surged since February after Russia’s invasion of Ukraine, resulting in bumper profits for energy companies.
Higher oil and gas prices has also fuelled the rise in energy bills for both households and businesses. The government is limiting gas and electricity bills through the Energy Price Guarantee scheme but instead of lasting for two years as originally planned, it will now end in April.
Ed Miliband, Labour’s shadow climate change secretary, said the current windfall tax on energy firms was flawed and “would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks”.
Shell’s profits were “further proof” the UK needed a higher windfall tax to make sure energy companies “pay their fair share”, he said.
The Liberal Democrats, Green Party and campaigners have also criticised the current policy.
But cabinet minister Nadhim Zahawi defended the windfall tax, telling the BBC’s Today programme Shell and other energy giants already pay high taxes.
He added that the existing levy was introduced in a “very smart way” because it incentivised investment.
“We need them to invest in the North Sea assets to grow our production,” he said.
A spokesperson at the Treasury said the Energy Profits Levy was expected to raise £17bn this year and next, and came on top of a headline rate of tax for the industry of 40%.
“We also want to see the sector reinvest its profits to support the economy, jobs, and our energy security, which is why the more investment a firm makes into the UK, the less tax they will pay,” they added.
A windfall tax is a one-off levy that targets companies who benefit from something they were not responsible for, in this case a sharp rise in oil prices.
The 25% tax is applied only to UK profits which, for most oil and gas companies, is a small part of their operations.
Oil and gas firms operating in the North Sea are taxed differently to other firms. They pay 30% corporation tax on their profits as well as a supplementary 10% rate. On top of that, they pay the windfall tax taking their total tax rate to 65%.
However, firms have been able to reduce the amount of tax they pay by factoring in losses or spending on things like decommissioning North Sea oil platforms. It means that in recent years, the likes of BP and Shell have paid almost no tax in the UK.
The Energy Profits Levy also has a measure that allows energy companies to apply for tax savings worth 91p of every £1 invested in fossil fuel extraction in the UK.
Downing Street said that any changes to the windfall tax would be a matter for Chancellor Jeremy Hunt’s autumn statement.
The prime minister’s official spokesman said “no options” were off the table given the country’s economic circumstances.
Shell said it made investments worth $400m in the UK during its third quarter. The firm’s finance chief Sinead Gorman said on Thursday: “We simply are investing more heavily than we have, and therefore we don’t have profits which we can be taxed against.”
Shell chief executive Ben van Beurden said the company was “working closely” with governments and customers to “address their short and long-term energy needs”.
‘Obscene’
Mr van Beurden previously said taxes on firms within the oil and gas industry were “inevitable” to help the poorest people. He said energy markets could not behave in a way that “damage a significant part of society”.
But Frances O’Grady, general secretary of the TUC union, said Shell’s profits were “obscene – especially at a time when millions are struggling with soaring bills”.
“The government has run out of excuses,” she said. “It must impose a higher windfall tax on oil and gas companies. The likes of Shell are treating families like cash machines.”
So far this year, Shell has reported profits of $30bn which is more than double the amount it made over the first nine months of 2021. The company plans to reward its shareholders with a 15% increase in its regular dividend and is on track this year to beat its record annual profit of $31bn in 2008.
Stuart Lamont, an investment manager at RBC Brewin Dolphin, said the higher pay-out from Shell to its shareholders “may well raise a few eyebrows” at a time when UK households are facing surging energy bills.
‘Gold mine’
Jonathan Gant, a fossil fuels campaigner at Global Witness, said oil and gas companies were the architects and beneficiaries of a “broken energy system”.
He said it was “blindingly obvious” that energy firms were sitting on an “untapped gold mine”.
“It’s time to stop punishing people for a system they didn’t create and take the money this country desperately needs from the immense profits Shell and other energy companies are enjoying.”
But Andy Mayer of the Institute of Economic Affairs, a free market think tank, said: “Few companies will invest where politicians are hostile to development before it happens, then punish success after the event.”
Nathan Piper, an oil and gas analyst at Investec, said fears of recession in many countries had led to oil prices dropping globally. Gas prices in the UK have also dropped sharply due to a lack of gas storage space and unseasonably mild October weather.
However, Mr Piper told the BBC the drop was “likely to be short-lived ahead of colder winter weather and associated increases in gas demand for heating”.
Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.
The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.
The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.
Five people had been arrested following the discovery, according to the prosecutor-general’s office.
Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.
The cocaine parcels had been hidden beneath crates of bananas destined for export.
One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.
They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.
Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.
Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.
Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.
These security forces have stopped large amounts of cocaine from being shipped to Europe.
In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.
However, extortion, kidnappings and murders remain high in the Andean country.
Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.
Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,
Previously, passport holders from 57 countries were allowed to enter without a visa.
Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.
Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.
Most of the visitors were from China, Malaysia and India.
Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.
Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.
The revised visa-free rules are part of a broader plan to boost tourism.
Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.
The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.
In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.
However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.
“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.
“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.
Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.
Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.
The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.
Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.
Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.
Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.
In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.
However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.
The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.
But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.
As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.
Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.
‘Unconditional commitment’
Mr Kretinsky has committed in writing to honouring the USO, but only for five years.
And after that, in theory, the new owners could just walk away from it.
However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.
Another potential stumbling block for the deal, however, is how the company will be structured.
Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.
Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.
To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.
It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.
If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.
Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.
“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.
“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”
Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.
The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.
Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.
“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”
He said if the management, union and employees work together, “we will be successful”.
Another concern is the potential break-up of the business.
The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.
Mr Kretinsky has promised not to split off GLS or load the parentcompany with excessive debt, although borrowings will rise if the deal goes through.
But he has a way to go to convince the CWU.
“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.
However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”
The union cannot stop this deal but the government can block it under the National Security and Investment Act.
Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.
Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.
Who is Daniel Kretinsky?
Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.
He then made serious money in Central and Eastern European energy interests.
This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.
He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.
The Czech businessman is worth about £6bn, according to reports.