Shell, BP, and TotalEnergies all expect that refining margins in the third quarter of 2023 will be three to four times higher than last year. Shell has predicted that the margin figure will reach $42 per barrel. On the other hand, TotalEnergies expects that cash flow from its refining and petrochemical segment will double compared to the previous quarter, reaching about $4 billion.
Increased profits for ExxonMobil and BP
ExxonMobil has also stated that higher refining margins could increase its downstream profits by $4.5 billion compared to the previous quarter. This profit surge relates to an analysis that suggests in times of scarcity, refiners and traders win, not just producers. BP, as a clear example, had previously announced that gas trading in the third quarter would be significantly better.
Changes in debt and investment plans
The most popular name among European oil giants belongs to BP. The company's base profit may exceed $7 billion, while this figure was $5 billion in the second quarter. A significant portion of this profit will be allocated to balance sheet repair. BP had the heaviest debt burden among the five major oil giants at the end of 2025, and this is expected to drop to about 0.8. Additionally, halting share buybacks has helped BP achieve its debt reduction target a year ahead of schedule.
Investors are now more focused on how the increased profits will be spent rather than the figure itself. This comes as companies are committed to controlling costs during this exceptional revenue period. Chevron and ExxonMobil have also allocated part of their income to debt repayment. In Chevron's case, investors are looking for progress in Venezuela projects and the extension of the Tengiz oil field (TCO) operating contract in Kazakhstan.
This situation reflects a structural contradiction. If higher profits stem from disruptions, the decision to spend these profits is a bet on the continuation or end of that disruption. For this reason, BP's focus on debt reduction and caution in buyback plans may indicate a lack of full confidence in the sustainability of this boom. Oil giants will announce their financial results on October 29 and 30, and what is more important than the profit numbers will be the tone of executives regarding costs and investments.
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