Ukraine calls on energy firms to help on infrastructure rebuild

30 Mar 2023

Quantum Commodity Intelligence – International energy companies that raked in massive 2022 profits due to last year's price spikes should contribute to rebuilding Ukraine's shattered power infrastructure, Energy Minister German Galushchenko told the Politico website.

European and US energy majors bagged record profits in 2022 after Russia invaded Ukraine as oil prices surged to 14-year highs, while Europe registered record natural gas and power prices.  

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

"I think it would be fair to share this money with Ukraine. I mean, to help us to restore, to rebuild the energy sector," he added.

The $200 billion figure given by Galushchenko referenced combined profits of five top companies — BP, Chevron, ExxonMobil, Total and Shell — in 2022. The Kyiv School of Economics estimates the damage to Ukrainian infrastructure at nearly $140 billion.

In the Politico interview, Galushchenko noted that Lithuanian company, Ignitis Group, is set to contribute 10% of its profits to help reconstruction in Ukraine and that larger energy firms should follow suit.

Galushchenko also warned that Moscow could wage a perpetual war in Ukraine for as long as the Kremlin can finance the war from selling fossil fuels.

Despite sanctions against Russian oil imports imposed by the EU and a price cap set by the G7, he said that Russian oil was still finding ways to overcome 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," said Galushchenko, arguing the West needs to close sanctions loopholes.

Separately, Politico reported that Poland and the Baltic States have been pushing for a review of current oil price caps, which had been due in March.

"The US doesn't want to do it. Estonia, Poland and Lithuania are pushing too far, especially given the reluctance from the US. This is not going to happen," an EU diplomat told Politico.

Oil prices retreated sharply in the wake of the March banking crisis but have since partially recovered.