Big oil profits top €260bn since start of Ukraine war: report

27 02 2024 | 09:26Nathan Canas / EURACTIV

European and US oil majors have made record profits totalling more than €260 billion since the Russian invasion of Ukraine started in February 2022, according to NGO Global Witness.

The  five largest Western oil and gas companies – Shell, BP, Chevron, ExxonMobil and TotalEnergies – have amassed profits of more than $281 billion (€261billion) since Russia invaded Ukraine, according to a report published by Global Witness on Monday (19 February).

Starting in the aftermath of the COVID-19 pandemic, wholesale energy prices have risen considerably with the conflict in Ukraine.

Economic sanctions imposed on Russia for its invasion of Ukraine and Moscow’s decision to stop gas imports to certain countries in retaliation have pushed up the price of gas in Europe, triggering a worldwide energy crisis.

American and European oil and gas companies have seen their profits soar as a result.

Faced with these record profits, US President Joe Biden accused oil companies of “profiting from war”, as did United Nations Secretary General António Guterres, who denounced the fact that these companies were “holding humanity by the throat”.

Patrick Galey, senior fossil fuel investigator at Global Witness, said that “regardless of what happens on the front lines, the fossil fuel majors are the main winners of the war in Ukraine”.

“They have amassed untold wealth off the back of death, destruction, and spiralling energy prices.”

British companies Shell and BP have made £75 billion in profits, a sum that could cover all the electricity bills of British households for 17 months, according to Global Witness.

Shell, in addition to reversing its decision to reduce its oil production in the next decade, has decided to dismiss 200 people from its green jobs division.

Record profits also allowed oil majors to strengthen their position by buying up smaller players in the oil and gas sector, with Chevron buying Hess Corporation for $53 billion and ExxonMobil buying Pioneer for $60 billion.

All these companies combined emit more carbon each year than Brazil, Australia, and Spain put together, Global Witness pointed out.

The five giant fossil fuel producers paid out an unprecedented $111 billion to their shareholders in 2023. This amount is equivalent to around 158 times what was pledged to nations vulnerable to climate change at COP28.

French oil giant TotalEnergies paid out €15 billion to shareholders, a sum that could have more than covered the €10 billion paid out by the French government to cover the damage caused by storms and droughts in 2022.

“[Oil companies] are now spending their gains on investor handouts and ever more oil and gas production, which Europe doesn’t need and the climate cannot take,” Galey said.

Taxing fossil fuels

Sebastian Mang, from the London-based New Economics Foundation, said the staggering profits amassed by big oil companies are a glaring example of a flawed economic system favouring fossil fuel giants over ordinary people.

“It’s high time to significantly raise taxes on profits by companies like Shell, Total, and BP, ban new oil and gas projects globally, and speed up public green investments,” Mang told Euractiv. “If we are to overcome the climate crisis our economic system must prioritise sustainability over greed.”

The European Commission has proposed revising the 2003 Energy Taxation Directive to ensure that low-carbon energies are taxed at a lower rate than fossil fuels.

But as taxation is an exclusive competence of EU member states, they each have a right of veto and the proposal has remained stuck.

Thierry Bros, a professor at Sciences Po University in Paris, told Euractiv that the extra profits made by energy firms are mostly returned to shareholders who have the possibility to invest it in greener companies if they wish.

“That’s how capitalism works: shareholders have the right to vote with their dollars,” he said.

According to Bros, a more efficient way of shifting the behaviour of oil firms is to apply carbon pricing policies more strictly.

“All those companies that have made enormous profits should pay all their scope 1 emissions in the EU and the UK”, Bros said, insisting that no CO2 emission allowances should be granted to oil refineries.

“This is amoral and against climate,” Bros said, adding that oil firms “should not be granted any subsidies in any form for any green program as they are rich enough”.

Cover photo: British companies Shell and BP have made £75 billion in profits, a sum that could cover all the electricity bills of British households for 17 months, according to Global Witness. [Photo credit: EPA-EFE/ANDY RAIN]