Global Oil Companies Expected to Buy Back Shares Worth 45 Trillion Won This Year, 'Largest Since 2008'

by Park Pyunghee

Published 21 Feb.2022 10:45(KST)

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] Major global oil companies that significantly increased their profits due to rising oil and natural gas prices are expected to greatly expand their share buyback programs this year, according to major foreign media reports on the 20th (local time).

Bernstein Research predicted that seven global oil companies, including ExxonMobil, Chevron, BP, and Shell, will repurchase shares worth $38 billion (approximately 45.4252 trillion KRW) this year. RBC Capital Markets forecasted an even larger buyback amount of $41 billion.

This amount is about twice the $21 billion spent in 2014 when oil prices last exceeded $100, and approaches the record $46 billion in 2008. In 2008, oil prices neared $150, reaching an all-time high, and ExxonMobil was the world's largest company by market capitalization. ExxonMobil repurchased nearly $30 billion in shares annually from 2006 to 2008.

This year, fueled by rising oil prices, oil companies are expected to engage in large-scale share buybacks. Thanks to the increase in oil prices, BP posted its highest profits in eight years last year, and Chevron and ExxonMobil also recorded their largest profits in seven years.

Shell is expected to repurchase more than $12 billion in shares this year, with at least $8.5 billion expected to be bought back in the first half alone. Chevron spent $1.4 billion on share buybacks last year but announced plans to increase the amount to between $3 billion and $5 billion this year.

Some voices argue that the increased profits should be invested in the eco-friendly energy sector.

BP plans to increase its share buyback amount from $3.2 billion last year to $4 billion this year, while planning to cut capital expenditures in the low-carbon energy sector, which was $1.6 billion last year, by half.