SHAREHOLDERS in BP and Shell are anticipating bumper payouts this week, powered by soaring oil and gas prices.

The two companies are predicted to enjoy a combined $13bn (£10.5bn) in profit from the first three months of 2022, a significant hike on last year's stellar results.

BP's finance director Murray Auchincloss told investors in February that it was possible "we're getting more cash than we know what to do with", with the fossil fuel titan revealing profits of $12.9bn and a $4.2bn planned share buyback, a week after Shell outlined earnings of $19.3bn and an $8.5bn buyback scheme.

Both energy firms have rebounded from heavy pandemic-driven losses thanks to oil prices spiralling above the $100 per barrel milestone and gas prices peaking at record highs, amid supply shortages and increased demand.

Markets were already tight at the beginning of the year, however Russia's invasion of Ukraine has exacerbated fears of disruption from Western sanctions and escalating conflict in the region.

With BP and Shell wallowing in cash, the government is now under growing pressure to impose a windfall tax on North Sea oil and gas companies to mitigate the deepening cost of living crisis.

Ahead of the results this week, the Labour Party has renewed calls for a oneoff £1.2bn levy as part of its proposals to shave £600 per year from energy bills for low-income households.

This comes after energy bills spiked 54 per cent last month to nearly £2,000 per year, amid historic market carnage across the domestic energy sector.

The government is reportedly split on the prospect of new levies on the North Sea oil and gas sector.

Business secretary Kwasi Kwarteng is concerned the measures could deter investment, however Chancellor Rishi Sunak is open to hiking taxes if the energy giants fail to meet their spending pledges to boost the UK energy sector.

Earlier this year, Shell announced its intention to invest £25bn in the UK's energy sector over the next decade, with 75 per cent focused on low or zero carbon energy.

Meanwhile, BP has pledged to double its UK investments over the decade.

(c) 2022 City A.M., source Newspaper