Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Big Oil should spend windfall billions on transition, not dividends, says former Wood Group CEO

© Supplied by WoodWood Group oil windfall
Former Wood Group CEO Bob Keiller

Oil giants should spend their billions of windfall profits on transition, not shareholder returns, according to the former CEO of Wood Group.

The invasion of Ukraine has sent oil and gas prices skyrocketing, which were already climbing steadily and had prompted calls for a windfall tax in the North Sea.

Bob Keiller said he has “no problem in normal times” with shareholders getting a reasonable dividend.

But, he said, “in abnormal times like today” oil and gas companies should inject “all of their windfall profits” into the three pillars of energy transition, developing existing energy sources and improving energy efficiency.

Those are a more appropriate use of oil and gas companies’ windfall revenues, which “will be billions of dollars”, than investor returns or, indeed, a North Sea windfall tax, he argued.

During their 2021 results, Shell and BP respectively announced share buyback schemes of $8.5 billion and $1.5 billion. The seven “majors” are on course to return $38bn to shareholders this year according to Bernstein Research.

Mr Keiller said: “Most are already heavily committed to energy transition but are still rewarding their shareholders handsomely through increased dividends and share buybacks.

“I have no problem with shareholders getting a reasonable dividend from earned profits in normal times.

“I understand that if investors stop getting a return on their investment they will pull their money out and invest elsewhere – damaging the share price, reducing the company’s access to capital, increasing their borrowing costs and reducing the likelihood that they will attract partners to invest alongside them.

“However, by normal times, I mean those times when there is sufficient flexibility in oil supply and demand to create a market that moves prices down toward the incremental cost of production. But, in abnormal times, like today, oil and gas companies should commit to investing all of their windfall profits into the priorities set out above. And if they don’t, then the case for regulation changes.

He signed off: “Use it (properly) or lose it.”

Keiller was CEO of Wood (then Wood Group) from 2012 – 2015 after leading the firm’s PSN business.

He went on to become chair of Scottish Enterprise for three years and now works as a business adviser.

Brent crude is currently sitting beyond $130 a barrel following news of sanctions of Russian supply by the US and UK.

On Friday UK gas prices hit a record high of more than 500p per therm.

Although oil giants have been boasting huge profits in the wake of the surging commodities, the toll being taken from their collective exit of Russia is yet to be seen.

BP announced that it could take an impairment of up to $25 billion from its exit.

Others such as Shell, Equinor and Exxon Mobil have taken similar steps.

TotalEnergies CEO Patrick Pouyanne said this week that exiting Russia, where his firm holds 20% of Novatek, would be inconsistent while the rest of Europe remains reliant on Russian supply.

Recommended for you

More from Energy Voice

Latest Posts