Soaring oil prices due to Ukraine war cause energy giants to reap profits of £11.6bn

Just Stop Oil activists vandalise a Cobham petrol station

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According to the analysis, a spike in oil and gas prices triggered by the Ukraine war could see energy giants enjoying unexpected, additional profits of £11.6bn this year from North Sea operations alone. Greenpeace and Oil Change International stated energy firms could see the money they make just from their North Sea fossil fuel operations increase by 111 percent from £10.46bn to £22.07bn, after Russia’s war sent energy prices soaring.

The campaigners are calling on the Government to tax the windfall profits and invest the money in green measures such as insulating homes, installing heat pumps and scaling up renewables.

The campaigners based their calculations on data from Rystad Energy, used by Governments and think tanks, which priced oil at $70 (£56) a barrel before the war, and then hiked it to $110 (£88) a barrel after the Kremlin sent troops and tanks across the border into Ukraine.

The £11.6bn reflects the companies’ estimated “free cash flow” – revenue after things like taxes, royalties, capital and operating expenditure – after the Russian invasion, and is based on Rystad’s modelling of hundreds of UK oil and gas projects.

Charlie Kronick, Greenpeace UK’s climate finance adviser, told Sky News that the “huge amount of extra generated income” is a “reminder that we do have the resources available to make the energy transition happen.”

He said: “This isn’t money that we’re taking out of the pockets of the oil industry because it’s money they would never have seen in the first place.”

Among the 10 companies that stand to benefit the most from the increase include BP in third place and Shell in fifth.

Russian energy giant Gazprom, with which many firms cut ties after Moscow’s invasion, is expected to reap profits of £80m from a joint venture with German company Wintershall Dea.

Britain Petrol posted its highest quarterly profit in more than a decade thanks to surging oil and gas prices, renewing calls for a UK Government tax on energy companies’ windfall earnings to help households struggling with rising energy bills.

The British energy giant said Tuesday that underlying replacement cost profit — the industry standard measure more than doubled in the first three months of the year, to $6.2 billion from $2.6 billion in the same period last year.

On Tuesday, the Prime Minister ruled out such a levy on the grounds it would deter investment, after a rift emerged between ministers over the issue.

A UK Government spokesperson warned a windfall tax would deter “billions worth of investment”, risking energy supply and almost 200,000 jobs that rely on the industry.

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The UK currently offers the “best profitability conditions” globally for oil companies, taking just under 40 percent in taxes, compared with around 50 percent in Canada and United States, and just under 80 percent in Norway, according to analysts at Rystad Energy.

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