BP expects write-downs of up to $25 billion in view of the end of its business partnership with the Russian oil company Rosneft.
(Photo: AP)
Big Western energy companies are learning an important lesson these days: their controversial business model can have painful consequences.
On the one hand, there are the close ties with Russia. Many corporations have increased their dependence on the autocratic state over the years because they have benefited greatly from it economically.
The oil company OMV has contributed to the fact that Austria now obtains 80 percent of its gas from Russia – and recently presented a record profit. Uniper repeatedly emphasized Russia’s reliability as a gas supplier – and benefited greatly from cheap Russian gas, which the Düsseldorf-based company was able to resell at a higher price. And the oil giant Shell, which recently made a decisive contribution to record results for western oil companies as a whole, bought a large quantity of oil from Russia even after the start of the Russian war of aggression in Ukraine.
Now all these corporations are forced to scale back their business with Russia. OMV is considering exiting a Russian gas field in which the company has a stake. Uniper no longer exchanges funds with its Russian subsidiary Unipro and has stopped all new investments in Russia. Shell has stopped doing business in Russia. And all three companies had to write off billions in investments in the Nord Stream 2 Baltic Sea pipeline, which was supposed to transport gas from Russia to Europe.
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At the same time, there is political headwind. Economics Minister Robert Habeck recently said that companies should not make “unreasonable profits” from the current situation, calling them “war profits”. At the very least, he must have meant the oil companies, which are earning a lot from the high fuel prices, while oil prices have already fallen again. Habeck has asked the Federal Cartel Office to examine the situation, and the Austrian government is taking a similar step.
It is good that politicians and authorities are now dealing with the high profits of the oil companies. After all, no one should be allowed to take unjustified profits from a situation that requires expensive investments in defense and energy security.
The fact that large energy companies are suffering severe financial losses as a result of Russia’s war against Ukraine is an important warning.
In the future, they should consider more carefully whether the short-term profit is really worth the permanent dependence on an unpredictable, autocratic regime.
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