Energy giants should give Ukraine windfall profits, says Lithuania group

Energy companies such as ExxonMobil, Shell and BP should donate one-tenth of their windfall profits directly to Ukraine as they earned them due to Russia’s war, according to a proposal from Lithuania’s largest utility.

Darius Maikštėnas, chief executive of Ignitis Group, launched a public appeal to more than 50 energy groups in the US and Europe to follow suit after the listed Lithuanian company said it would ask its annual meeting for approval to pay about 10 per cent of its extra profits from 2022, or €12mn, to help rebuild Ukraine’s energy infrastructure.

“We urge you to follow suit and earmark part of your 2022 profits for Ukraine. We believe sharing profits with the country that is suffering the consequences of the war that has led to those profits is morally the right thing to do,” Maikštėnas said.

The appeal was sent to companies including Chevron, ConocoPhillips, Equinor and TotalEnergies, saying that oil and gas groups as well as utilities had earned hundreds of billions of dollars in extra profits due to Russia’s full-scale invasion of Ukraine a year ago. That led to a spike in both natural gas and electricity prices.

“All together we can do more. If each of us contributes, we can significantly help this embattled country and speed up its recovery . . . The war that Russia started in Ukraine a year ago has had disastrous effects, first and foremost, on the people of Ukraine,” Maikštėnas said in his appeal.

He added that the big increase in profits was due not as a result of “investments or business strategies, but of higher prices because of the war”.

The Baltic countries have been at the forefront of pushing European and US policymakers to toughen sanctions against Russia and give more support to Ukraine. Public appeals in Latvia and Lithuania have led to donations of drones and other military equipment. But Ignitis’ proposal is the most concrete corporate action from the region so far.

Ignitis, which listed in Vilnius in 2020, is part of Lithuania’s efforts to keep energy independence from Russia as the Baltic state tries to boost its domestic electricity production and use a floating LNG vessel for gas supplies.

Some countries such as the UK have introduced a windfall tax on oil and gas companies and utilities after many of them recorded record profits in 2022. Energy majors such as BP, Shell, ExxonMobil and Equinor posted combined net profits of more than $200bn last year.


Business Asia
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