LONDON, April 29 — Europe’s major energy companies profited from a rise in oil prices to report big increases in first-quarter earnings today, putting the worst of the pandemic era slump in fuel demand behind them.

Last year’s demand collapse forced BP, Royal Dutch Shell and Equinor to slash their dividends and preserve cash as they to try to transform themselves into companies that can thrive in a low-carbon world.

With benchmark oil prices recovering from an April 2020 low of US$16 (RM65) a barrel to about US$67 a barrel this month, most of the companies managed to drive profits back above levels seen before the coronavirus pandemic first struck.

BP’s first-quarter headline profit figure of US$2.6 billion exceeded its first-quarter profit of US$2.4 billion in 2019 and was more than 200 per cent higher than in 2020.

France’s Total reported headline profits of US$3 billion in the first three months of 2021, up 69 per cent from last year and 9 per cent above the first quarter of 2019.

Norway’s Equinor, meanwhile, came in with a first-quarter profit of US$5.5 billion today, also exceeding its pre-pandemic profit of US$4.2 billion.

Shell’s first-quarter profit climbed 13 per cent from last year to US$3.2 billion though that was still below 2019’s US$5.3 billion.

But despite recovering profits, payouts were still below pre-pandemic levels with the exception of Total, which had kept its dividend steady throughout the pandemic.

While Shell has increased its dividend twice in the past six months, the 17.35 cents it paid per share in the first quarter was below the 47 cents it paid out before the pandemic.

Equinor also raised its payout to 15 cents per share, but again this was short of 2019’s 26 cents per share.

"The suggestion is that capital is being preserved to allow for an acceleration of new energy investment,” Citi said.

BP’s 3.8 pence per share first-quarter dividend was about half of what it paid in 2019. However, it is starting share buybacks which analysts expect to increase in the third quarter.

"BP should be able to buy back at least US$10 billion between 2021 and 2025,” said analysts at Jefferies.

Spain’s Repsol reported a 5.4 per cent rise in first-quarter adjusted net profit to €471 million (RM2.3 billion), though this was 24 per cent below earnings in the first three months of 2019.

It cut its 2021 and 2022 cash payouts to €0.60 from €1 per share, but said share buybacks could push returns above €1 per share by 2025. — Reuters