Published - February 7, 2023 @ 11:17 AM (EET)

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On Tuesday, Oil major BP (NYSE:BP) joined its peers by cashing in on soaring oil and natural gas prices since Russia's invasion of Ukraine, posting a record profit of $28 billion in 2022.

For the fourth quarter, the British energy giant posted a net profit of $4.8 billion, slightly lagging behind the $5 billion consensus estimates of 28 analysts.

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The strong results bring the combined historic profits reported for 2022 to more than $159 billion for the most prominent Western oil companies thus far, delivering significant rewards to investors.

BP increased its dividend by 10% and announced an extra $2.75 billion of buybacks after buying $11.7 billion in 2022, highlighting a contradiction in Europe's oil industry. 

While leading producers talk increasingly about the need to cut emissions and switch to cleaner energy, BP said it would cut oil and gas production at a slower rate than previously targeted.

As a result, their polluting fossil fuel business is becoming increasingly lucrative. BP now aims to reduce fossil-fuel production by 2030 by more or less 25% from 2019. Previously, the oil major planned to slash output by 40% during the same period.

In a statement, Chief Executive Bernard Looney said,

"We are strengthening BP, with our strongest upstream plant reliability on record and our lower production cost in 16 years, helping to generate strong returns and reducing debt for the eleventh quarter in a row."

NOW WHAT

Prominent oil executives have sought to defend their rising profits in recent quarters, saying the significant disruption to global energy markets as a result of the Russia-Ukraine conflict has reaffirmed the necessity to solve "the energy trilemma."

This trilemma refers to "secure, affordable and lower carbon energy", according to a statement to investors from Looney.

Spending up to $16 billion, the company said it would evenly split new investment between low-carbon energy and oil and gas, with total expenditure potentially slightly higher than initially planned. 

BP's full-year result beat BP's previous record underlying profit in 2008 of $26.2 billion amid soaring oil prices.