Energy giant bp is poised to unveil bumper fourth-quarter profits when it presents to the City on Tuesday.
With energy prices rising, analysts predict the FTSE 100 major will report profits of around $7billion for the fourth quarter of 2021, taking its annual earnings to over $17billion.
The results, which follow Shell's fourteen-fold rise in profits, will re-energise those who wish to see a one-off windfall tax on North Sea profits.
What the analysts say
However, Danni Hewson, AJ Bell financial analyst, says investment in the energy transition will take the sting out of the tail of that argument.
“Then there is the expectation that 'Big Oil' will fund the 'Big Transition'," she said.
"Both BP and Shell have made pledges to cut oil and gas output and increase spending on renewables. That comes with a significant price tag and there has been growing pressure on both businesses to increase the amount of money they spend on speeding up that transition.
"Both businesses could shore up considerable goodwill amongst consumers, politicians and activists alike if they took this opportunity, and a chunk of their profits, and supercharged their clean, green spend, making consumers less reliant on those oil and gas supplies which have caused such a price pickle.
"But of course, what goes up must ultimately come down. Energy prices will normalise and profits will become harder to come by and both the companies and investors will have to shoulder the burden along with the bounty.”
A 'greening' business
Bernard Looney, bp's CEO, aims to shift the company from an ‘international oil company’ to an ‘integrated energy company’.
It wants to increase its developed renewable energy generating capacity from 2.5GW to around 50GW, including its 2.9GW offshore wind lease in the North Sea which will result in Aberdeen becoming its global offshore wind centre of excellence.
However, bp is not shying away from where the cash to fund its enormous transition will come from. In a recent interview with Time Magazine in the US, Mr Looney said the company will continue to sanction and develop new oilfields
"Oil and gas will continue to be needed," he said.
"People may not like to hear that. It may be an unpopular truth. We will do that and we will use those cash flows to help us make the transition."