Oil and Gas Sector Made $4 Trillion in Profits in 2022, IEA Chief Says

From ExxonMobil to Shell to BP, several major oil and gas companies reported record profits in 2022 as the price of both fossil fuels spiked following Russia’s invasion of Ukraine. 

Now, International Energy Agency (IEA) Executive Director Fatih Birol says the industry as a whole made $4 trillion in profits last year, more than double its recent annual average of $1.5 trillion. 

“The sector has a unique opportunity to invest a significant chunk of this in clean energy transitions, especially in emerging & developing economies,” Birol said on Twitter.

However, it does not seem as if the oil and gas industry is heeding Birol’s advice. Following its year of record profits, BP has said it will increase its oil and gas production over the next seven years, rolling back plans to curb production by 2030. Exxon has also decreased or stopped funding for efforts to turn algae into biofuels, despite the fact that it has advertized its investment in this climate solution for years, as Bloomberg reported. However, Exxon did not link its retreat from algae to its record oil and gas profits. 

“At this point we have other programs that are ready for deployment,” Exxon’s senior director of technology Vijay Swarup said, as Bloomberg reported. “We need to get on the deployment curve for carbon capture, for hydrogen, for biofuels. Algae still needs some more work.”

Birol’s comments on oil and gas profits came as he spoke at the Oslo Energy Forum in Norway Tuesday, according to Nairametrics. The six largest international oil majors–which include Chevron, TotalEnergies and Equinor in addition to Exxon, Shell and BP–together made a record $219 billion in profits, around double their 2021 haul, as OilPrice.com reported. Each also earned record profits individually. 

Despite the sector’s record earrings, Birol still advised a shift to cleaner energy, especially for countries whose economies are based on fossil fuels, Reuters reported. Otherwise, these nations could find themselves in trouble as demand decreases in the future. The IEA has previously said that no new fossil fuels should be developed beyond those already planned through 2021 if world leaders want to limit global warming to 1.5 degrees Celsius above pre-industrial levels and avoid the worst impacts of the climate crisis. 

“Especially the countries in the Middle East have to diversify the their economies. In my view, the COP28 (climate summit) could be an excellent milestone to change the destiny of the Middle East countries,” Birol said Tuesday, as Reuters reported. “You cannot anymore run a country whose economy is 90% reliant on oil and gas revenues because oil demand will go down.” COP28–which is set to be held in Dubai in November of 2023–has come under fire because the UAE named the head of the Abu Dhabi National Oil Company (ADNOC) Sultan Al Jaber to lead the talks, raising concerns from climate advocates about oil industry influence on the international negotiations.