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'They get this money because we are fighting': Ukraine minister demands cut of Big Oil 'war profits'

Firstpost logo Firstpost 31-03-2023 FP Staff
'They get this money because we are fighting': Ukraine minister demands cut of Big Oil 'war profits' © Provided by Firstpost 'They get this money because we are fighting': Ukraine minister demands cut of Big Oil 'war profits'

New Delhi: Ukrainian Minister of Energy German Galushchenko has said that major oil companies have made record profits due to the conflict in Ukraine and should pay to rebuild the country’s war-torn infrastructure.

The minister told Politico that oil and gas majors have generated windfall profits of over $200 billion due to wild swings in global energy prices, and should transfer some of those funds to Ukraine.

“A lot of energy companies get enormous windfall profits due to the war. So we estimated this at more than $200 billion,” Galushchenko said on a visit to Brussels. “They get this money because we are fighting, because of the war.”

Galushchenko also argued the West needed to close sanctions loopholes on Russian energy sales to prevent an “endless war” in Ukraine, and said Kyiv could provide alternative nuclear fuel so some EU countries could wean themselves off their dependence on Russian supplies.

According to the report, he warned that Moscow would be able to wage a perpetual war in Ukraine for as long as the Kremlin is able to rake in cash from selling fossil fuels.

Despite sanctions against Russian oil imports imposed by the EU and a price cap set by the G7 club of rich democracies, he warned that Russian President Vladimir Putin was still finding ways to beat international embargoes.

“If on one side you’re trying to restrict them and on the other you’re giving them opportunities, you’ll allow them to make endless war,” he complained, arguing the Kremlin was using its energy export earnings “not to help Russian people to live better” but “to produce weapons” and keep the war going.

“This money costs Ukrainian lives,” he told Politico.

Sanctions sent energy prices soaring

Sanctions imposed on Russia by the West over the past year in response to Moscow’s military operation in Ukraine have sent energy prices soaring.

The sanctions were imposed after Moscow recognised the independence of its puppet states, the Donetsk and Luhansk People’s Republics, on 21 February 2022 in a speech by Vladimir Putin.

With the commencement of attacks on 24 February 2022, a large number of other countries began applying sanctions with the aim of devastating the Russian economy.The sanctions were wide-ranging, targeting individuals, banks, businesses, monetary exchanges, bank transfers, exports, and imports.

The sanctions included cutting off major Russian banks from SWIFT, the global messaging network for international payments, although there would still be limited accessibility to ensure the continued ability to pay for gas shipments.

Sanctions also included asset freezes on the Russian Central Bank, which holds $630 billion in foreign-exchange reserves,to prevent it from offsetting the impact of sanctions and implicated the Nord Stream 2 gas pipeline.

By 1 March 2022, the total amount of Russian assets frozen by sanctions amounted to $1 trillion.

Oil majors record combined profit of $196.3 bn

In 2022, oil majors Shell, BP, Exxon Mobil, Chevron, and TotalEnergies posted a combined profit of $196.3 billion, marking an all-time high for the industry.

“I think it would be fair to share this money with Ukraine. I mean, to help us to restore, to rebuild the energy sector,” Galushchenko said, adding that the record profits had been achieved purely because of the conflict in his country.

According to the latest assessment by the Ukrainian government, the World Bank, the European Commission, and the UN, the estimated cost of the country’s reconstruction and recovery will be over $400 billion.

With inputs from agencies

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