Major European oil companies saw a drop in their profits in the third quarter of the year, reported France Press. This is due to lower oil prices and lower refining margins. However, the companies still have good returns and continue to reward their shareholders.
The French energy corporation “TotalEnergies” (TotalEnergies) in the third quarter reports the biggest drop in profits since the pandemic of COVID-19. Its net income fell 65 percent to $2.3 billion, almost the same as in the fourth quarter of 2020. – 65.7 percent, writes BTA.
The situation is the same for BP. The British energy corporation, which was also hit by asset write-downs, posted a profit of $206 million (for the third quarter of the year) on Tuesday, up from $4.9 billion a year earlier. These are “the most difficult three months that society has experienced since the pandemic”, noted Danny Hewson, an analyst at the investment company “AJ Bell”.
Another British oil and gas giant, Shell, today announced a sharp drop in third-quarter net profit to $4.3 billion from $7 billion in the same period last year. The energy corporation has also been hurt by falling refining margins and oil prices.
We are a long way from the gains of 2022, when oil companies benefited from a surge in natural gas and oil prices as a result of the economic recovery from the COVID-19 pandemic and the Russian invasion of Ukraine.
Then “Shell” and “TotalEnergy” reported the highest annual profits in their history, of 42.3 and 20.5 billion dollars, respectively.
Oil prices are currently low due to weak demand in China, the top importer of crude oil, and forecasts to increase production in 2025. Prices rose at the end of the third quarter as tensions in the Middle East fueled instability in the region.
BP is not bullish on Q4 2024. The company expects refining margins to “remain low” and production “to be lower” than in the past three months.
“In the context of modest global economic growth and geopolitical tensions in the Middle East, oil prices are volatile,” TotalEnergy said in its assessment of the situation.
Interview between Time.news Editor (TNE) and Energy Expert (EE)
TNE: Welcome, everyone, to this special segment where we dive into the latest trends shaping the energy sector. Today, we have an expert in the field, [Expert’s Name], here to shed light on the recent profit declines among major European oil companies. Thank you for joining us!
EE: Thank you for having me! It’s a pleasure to be here.
TNE: Let’s get right into it. Major European oil companies like TotalEnergies and BP have reported significant drops in their profits this third quarter. TotalEnergies saw a staggering 65% decline to $2.3 billion. What do you think are the main factors behind this sharp downturn?
EE: Well, there are a couple of key elements at play here. Firstly, the overall drop in oil prices has been a significant contributing factor. When prices drop, revenues decline, and subsequently, profit margins are squeezed. Additionally, lower refining margins have compounded this issue for companies that rely on refining operations to boost their earnings.
TNE: That makes sense. TotalEnergies is reporting profits nearly at the same level as during the pandemic. How concerning is this for the company’s future?
EE: It certainly raises eyebrows. A 65% drop is serious, especially so soon after recovering from the pandemic years. However, it’s important to note that despite this decline, the company is still reporting profits and remains committed to shareholder returns. This might suggest that they are trying to maintain investor confidence amid turbulent market conditions.
TNE: Speaking of investors, BP reported a profit of just $206 million, down from $4.9 billion a year earlier. How does this reflect on their strategy moving forward?
EE: BP’s significant downturn also hints at challenges with asset write-downs. In such a scenario, companies might need to rethink their investment strategies in exploration and renewal. When a company posts such profits, it might also indicate a need to dive deeper into alternative energy investments or technologies that can offset the volatility in oil prices, which we’ve been discussing.
TNE: So, while the current situation looks grim, there could still be strategic opportunities in a transition towards more sustainable energy sources. Would you say this is the direction these companies should take?
EE: Absolutely. The transition to renewable energy is no longer a distant goal—it’s becoming a necessity for survival in this industry. With fluctuating oil prices, companies that diversify into renewables and adapt to changing consumer preferences can better weather economic storms and position themselves for the future. Staying solely reliant on fossil fuels could put them at a disadvantage.
TNE: As the market evolves, are there any risks or challenges that you foresee for companies like TotalEnergies and BP?
EE: Certainly. One significant challenge is regulatory pressure regarding emissions and sustainability. As governments push for greener practices, these companies may face increased scrutiny and regulations that could impact profitability. Moreover, the competition from emerging renewable technologies can be a double-edged sword—presenting both opportunities and threats.
TNE: Thank you for those insights. In the midst of these challenges, do you believe there is a path to stability for these major players in the near future?
EE: Yes, I do. Economic cycles will continue, and while we’re currently in a phase of low profitability, the demand for energy—both fossil and renewable—will persist. Companies that adapt swiftly, invest in innovation, and understand the market dynamics will find their footing again. It may take time, but the potential for recovery is there.
TNE: Excellent perspective! Thank you, [Expert’s Name], for sharing your expertise on this pressing topic. It certainly seems like the energy sector is at a critical crossroads, and we appreciate your insights.
EE: Thank you for having me. It was a pleasure discussing these important issues!
TNE: And thank you to our viewers for tuning in. Stay with us for more updates and expert interviews on the energy landscape.