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Repsol’s annual profit boosted by high oil prices

Spanish energy giant Repsol said Thursday its 2022 net profit soared on the back of higher oil prices, enabling it to boost investments into mainly greener power sources.

The company posted an annual net profit of 4.25 billion euros ($4.55 billion), up from 2.5 billion in 2021, despite “a year marked by uncertainty, volatility, and complex market dynamics due to the invasion of Ukraine.”

The company said gas and oil prices “rose sharply during the first half of 2022” due to sanctions imposed against Russia over its invasion of Ukraine which boosted its bottom line.

Oil and gas firms around the world including Shell and Chevron have reported blockbuster earnings due to soaring energy price in the wake of the war.

Brent crude flirted with $140 per barrel last March and European gas prices jumped by a factor of 15 during the summer to hit 350 euros per megawatt hour, but they have dropped sharply since then.

The surge in energy prices mechanically drove profits higher without energy firms having to invest in more production or cut costs.

Repsol said the higher earnings had allowed it to boost investments in 2022 by 40 percent over the previous year to 4.18 billion euros, mainly in Spain and the United States.

The bulk of its investments were in low-carbon technology needed to reduce planet-warming emissions.

The company said it plans to make “historic” investments of over 5.0 billion euros in 2023.

Repsol said it will also use its higher cash flow to raise its cash dividend by 11 percent to 0.70 euro per share and buy back 35 million additional shares.

The hefty profits earned by oil and gas firms come as many households are struggling to pay soaring energy bills, creating a political headache for those in power.

Spain’s leftist government has imposed a windfall tax on energy companies in 2023 and 2024 to raise funds for measures to mitigate the impact of high energy costs and inflation, especially on low-income households.

“The social debate on corporate profits must be put in context,” Repsol’s chief executive Josu Jon Imaz said Thursday.

“Populist messages only serve to hinder business activity, provoke distrust in investors, reduce investment and economic activity, reduce tax collection and put industrial employment at risk,” he added.

Repsol said it had earmarked over 500 million euros last year to provide fuel discounts at its service stations in Spain.