The British Gas owner Centrica has reported profits more than doubling, driven by higher prices for its North Sea oil and gas business.
The FTSE 250 group said that adjusted operating profits rose by 112 per cent to £948 million in 2021, caused by a more than sevenfold increase in profits from its oil and gas business Spirit Energy, which operates in the UK and Norwegian North Sea. Adjusted operating profits in this division rose to £624 million from £84 million a year earlier.
Profits at the British Gas household energy supply division rose by 44 per cent to £118 million, despite a loss in the second half of the year.
The rise in profits risks inflaming political tensions as households face a record 54 per cent increase in energy bills from April because of soaring gas prices.
Centrica said it “should soon be in a position to restart paying a dividend” although it did not declare a dividend for 2021. It said that Chris O’Shea, its chief executive, had decided to forfeit his £1.1 million bonus as he was “aware that it has been an extraordinary year with the energy crisis and the cost-of-living crisis and that customers are facing a difficult time”. The company has repaid £27 million that it had claimed under the furlough scheme.
British Gas is Britain’s biggest energy supplier and expanded to supply almost 7.3 million households by the end of last year after taking on hundreds of thousands of customers from failed energy suppliers.
O’Shea defended Centrica’s profits, saying that “the vast majority of increased profits will go to the government” in the form of tax and that on a post-tax basis its oil and gas profits had less than doubled. “Our tax bill is up almost half a billion pounds: there has been a huge tax windfall for governments from this, and that’s quite right,” he said.
UK wholesale gas prices rose sharply this morning after Russia invaded Ukraine. O’Shea declined to comment on the likely impact on bills or supplies to the UK, saying: “I don’t think it’s going to help anyone to speculate what this might do to the UK. I think we have to wait to see how this unfolds, it is absolutely unprecedented.”