Ukraine War: Oil companies profited more than US$200 billion – 02/23/2024 – Environment

Since the beginning of Russia’s invasion of Ukraine, which completes two years this Saturday (24), the five largest oil companies in the world — Shell, BP, Chevron, ExxonMobil and TotalEnergies — have already profited more than US$281 billion (R$ 1.4 trillion).

Declared by scientists as the hottest year in human history, 2023 also saw record remuneration for shareholders of these companies, who pocketed US$111 billion (R$554 billion).

The amount distributed represents 158 times the amount promised to the nations most vulnerable to climate change during COP28 (UN climate convention) in December. The so-called loss and damage fund managed to raise US$700 million at the conference in Dubai.

In total, since the conflict began, the five major oil companies have distributed around US$200 billion (R$996 billion) to their shareholders.

The figures were gathered in a new report from the non-governmental organization Global Witness, which showed that the profits of fossil fuel companies were boosted by the war.

In general terms, the conflict in Europe shook global supply chains and caused the price of the commodity to soar, also causing a cascade effect that put pressure on inflation in several sectors, particularly transport and food.

“Russia’s invasion of Ukraine was devastating for millions of people, from ordinary Ukrainians living under the shadow of war to families across Europe struggling to heat their homes,” said Patrick Galey, senior fossil fuel researcher. from Global Witness.

“This analysis shows that regardless of what happens on the front lines, big fossil fuel companies are the main winners of the Ukrainian War. They have accumulated untold wealth thanks to death, destruction and soaring energy prices,” he added. .

The British Shell and BP have together profited around US$94.2 billion (R$469.2 billion) since the start of the war. According to the Global Witness survey, this amount would pay the electricity costs of all homes in the United Kingdom for 17 consecutive months.

French company TotalEnergies distributed around US$15 billion (R$74.8 billion) to shareholders, which, according to the report, would comfortably cover losses caused by storms and droughts in France in 2022.

Environmental organizations also consider that the increase in revenues associated with fossil fuels may be contributing to reducing companies’ willingness to embrace the energy transition.

In 2023, Shell announced that it would backtrack on its commitment to reduce oil extraction by between 1% and 2% per year this decade, in addition to having plans to lay off around 200 employees related to green energy. Since the beginning of the war, the British company has made a profit of US$58.9 billion (R$293.5 billion).

The change of direction was no exception. Despite global calls to reduce greenhouse gases, BP has reduced its voluntary emissions commitment in 2023.

The British giant had been a pioneer among major oil companies in publishing a clear roadmap for the energy transition. In addition to adopting the slogan “beyond oil”, the company had announced a plan to reduce emissions by more than 35% by the end of the decade. Now, the cut should be between 20% and 30% in the same period.

Recent profits in the oil sector, accompanied by generous dividends for its shareholders, have also diminished support for decarbonization initiatives among company holders.

“Shareholder resolutions requiring companies to align their business activities with Paris Agreement commitments on climate change received less support in 2022 than in 2021. In the case of Shell, for example, such a resolution from the activist group Dutch shareholders Follow This got just 20% of the vote, compared to 30% a year earlier,” highlighted a Washington Post report.

Among Chevron shareholders, in 2022, the group’s proposal had the support of only a third of shareholders, while, a year earlier, a similar initiative had received support from 61% of them.

With a combined profit of US$136 billion since the start of the conflict in Ukraine, North American companies Chevron and ExxonMobil have increased their investments in oil extraction.

Both companies have made acquisitions that will see their emissions increase by a combined 20%. According to Global Witness, this means that, annually, companies will have more carbon emissions than Brazil, Spain and Australia combined.

The profits of oil companies have already drawn criticism from US President Joe Biden, who accused the industry of “profiting from war”.

The most recent reports from the IPCC (UN panel of climate experts) made clear the need for a significant reduction in greenhouse gas emissions to limit global warming and its worst consequences for humanity.

Despite the recent appreciation of oil, forecasts from the International Energy Agency, linked to the OECD (Organization for Economic Cooperation and Development), indicate that the sector’s boom may not last long.

The entity’s latest report, published in October 2023, projects that demand for fossil fuels —coal, oil and gas— is expected to peak in 2030, falling thereafter.

“The transition to clean energy is happening around the world and it is unstoppable. It’s not a question of ‘if’, it’s just a question of ‘when’. And the sooner the better for all of us,” said the director agency executive, Fatih Birol.

“Governments, businesses and investors need to support clean energy transitions, rather than hinder them. There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal access to energy and a healthier climate. safe for everyone.”

For him, “given the current tensions and volatility in traditional energy markets, the claims that oil and gas represent safe or protected choices for the world’s energy and climate future appear weaker than ever.”