Trade secrets: oil majors keep quiet on a key profit driver

Trade secrets: oil majors keep quiet on a key profit driver

As Europe’s biggest energy companies reported record profits for the first three months of the year, each singled out different parts of their business for praise. But there was one constant: trading.

BP’s highest quarterly earnings since 2008 were driven by “exceptional oil and gas trading”. TotalEnergies noted the “outperformance” of its oil trading activities and the “very good performance” of its gas and electricity dealers. At Shell, “higher trading and optimisation margins for gas and power, due to exceptional market environment”, resulted in the highest quarterly profit on record.

But beyond these qualitative statements none of the three provided any further breakdown of the financial performance of their various trading units or their contribution to overall group profits.

The companies say the traders are integrated into different parts of the business, making it difficult to strip out their performance. BP’s oil trading profits, for example, are attributed to the customers and products division, where the unit that refines and trades oil reported earnings before interest, taxes, depreciation and amortisation of $2.03bn.

The trading teams, however, are not only placing the company’s production with customers. They also buy and sell third-party volumes of oil, gas and other commodities for profit, making them significant revenue