Energy: British Gas owner Centrica records £134bn profit as Shell returns billions to shareholders

British Gas owner Centrica and Shell have recorded billions in profits, as inflation-squeezed households face surging energy bill costs.

Centrica today reported its operating profits had ballooned five-fold to £1.34 billion.

This was a significant increase compared with £262 million in the same six months a year earlier.

The energy company also announced it would be reinstating its dividends of 1p per share after these were suspended in 2020.

Also today, Shell announced it would return billions of dollars to its shareholders as the oil giant continued to profit from massive energy price hikes following the Russian invasion of Ukraine.

The business said on Thursday (28 July) it would buy back $6bn (£4.9bn) worth of shares from its investors, as earnings beat expectations - earning Shell a record second-quarter result.

The energy giants' announcements come as gas prices have hit record highs in Europe following Russia's invasion of Ukraine, which has sent energy bills rocketing for consumers.

Centrica group chief executive Chris O’Shea said it was "very aware of the difficult environment many customers are facing," and promised the energy giant would continue to "support customers through the most challenging energy crisis in living memory."

"We are investing in our customers and colleagues, creating at least 500 additional UK-based customer service roles in British Gas Energy and 1,000 new UK engineering apprenticeships, while through the British Gas Energy Support Fund we are providing grants to help customers pay their energy bills," he added.

The energy sector profits come as gas prices rise across Europe and the continent faces a difficult winter ahead.

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Shell chief executive Ben van Beurden said the business was using its financial strength to invest in secure energy supplies, taking "bold" steps to cut carbon emissions, and transform the company for a low-carbon energy future.

It remains to be seen if gas will need to be rationed in the continent, but with Russia strangling its gas supplies to the region, prices are expected to be high.

It means Europe will turn to buying gas from elsewhere.

• ITV News Political Correspondent Carl Dinnen sets out the differing strategies the main political parties have to deal with the worsening cost-of-living crisis.

Mr van Beurden said it is a “very uncomfortable” position because Europeans will be outbidding other countries to attract the world’s limited number of liquid natural gas (LNG) shipments.

He warned that if Europe's demand increased in winter, competition for LNG supplies would be squeezed elsewhere in the world.

The Shell boss predicted that the alternative for many of these countries will be to burn more coal.

Meanwhile, Money Saving Expert Martin Lewis has called on the government to intervene as gas prices soar, warning they will have a "frankly catastrophic" impact on millions later this year.

The latest predictions estimate the energy price cap will increase by 77% on October 1 to £3,500, and in January next year it will rise even further.

The government will hand £400 in energy bill discounts to households this October.

Its support package has also provided £650 to eight million low-income households, £150 for those on disability benefits and £300 for pensioners.But critics have warned the boosts won't go far enough for consumers grappling with the cost of living crisis as UK inflation hit a 40-year high of 9.4%.

This means Britons will see a £1,500 a year hike in bills, which is "simply unaffordable for millions of homes" and is likely to put upwards of 10 million people into fuel poverty, Mr Lewis told ITV News.

Martin Lewis explains to ITV News the 'devastating' impact of the 'simply unaffordable' price hikes Britons are facing this autumn

The National Grid has also warned prices could surge even higher if Russia cuts off natural gas flow to Europe amid its war in Ukraine.

“It is clear that the cessation of flows of gas into Europe could have knock-on impacts, including very high prices,” the National Grid said on Thursday in its early outlook for winter.

The warning came as Moscow reduced gas flows through the Nord Stream 1 pipeline, which sent wholesale gas prices rocketing and led to predictions households could be hit with energy bills of £3,850 next year, remaining above £3,500 into 2024, Bloomberg reported.

As one of the biggest energy suppliers in the world, President Vladimir Putin can use gas to pressure governments to recognise the territory he has seized in Ukraine as being under Russian control.

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