Chair's Corner - April 2022

Chair's Corner - April 2022

Hello April,

Two months ago, I spoke of the tightness of the market, and how susceptible the price was to a potential attack in Iran, Saudi or the Middle east.

What I never saw was a Russian invasion of Ukraine. However, the fundamentals simply reiterated the susceptibility of the markets to geopolitical tensions.

Russia’s invasion of Ukraine has entered its 2nd month with more companies announcing that they are exiting their Russia holdings including Shel, bp, Equinor, ExxonMobil, Schlumberger, Halliburton, Baker Hughes, KCA Deutag and others. The reality however is that Europe remains tied to Russia due to their dependence on Russia to meet 40% of their natural gas needs. That energy demand is not disappearing; perhaps, high gas prices can help with that albeit slowly. As such, the supply choke due to Russian sanctions will only keep oil prices higher. The question, from an oil and gas industry perspective is: is this good or bad news?

There are 2 schools of thoughts on this. The first more oil- enthusiastic view sees this as an opportunity to remind the EU and the Biden administration of the importance of the industry. Truly, the price hike would have been avoided if a more practical and sustainable approach was taken for the energy transition. It is public knowledge that Putin took advantage of the tightness of the supply markets to launch the invasion. Even though the war strategy is failing, it is hard to imagine he did not foresee the economic impact of the invasion. As such, we are likely to see a protracted war or sanctions that would keep a significant portion of Russia’s oil off the market. This means that we might be headed for a higher-for-longer price regime. This, however, may not be a sustainable mindset for developing business models beyond the next 5 years.

This leads us to the 2nd school of thought. Here, we acknowledge that the high oil prices are simply due to a geopolitical risk premium. Rather than look at this from an oil and gas industry perspective, we consider the viewpoint of nations that depend on energy imports. This would make you realize that the ultimate impact of Russia’s invasion

of Ukraine is an accelerated energy transition. Putin has simply made Energy Security and Independence the slogan for political campaigns across all oil-importing nations, especially the EU. For starters, Shell has announced that $33 billion saved from its exit of the Russian business would be re-invested in the UK, but with 75% of this going to renewable energies.

In summary, as Murphy CEO said, this price hike is the perfect opportunity to clear debts. But whether investments would return to the industry and stay for longer, remains a different question. Perhaps, with Biden’s promise of 15 billion cubic meters of US LNG to help EU ease its reliance on Russian gas, there might be some hope. In the end, this is all we can do as an industry: increase the US domestic production because only the US, Norway and a handful of energy exporters have the legal framework that the EU can rely on when discussing its energy security.

The communications team has been working lately on two main initiatives such as: enhancing the current SPE-GCS  website and leading the task to put together an editorial team (volunteer based) that will be in charge of the CONNECT newsletter magazine.

Let’s talk about the latest enhancements on the SPE-GCS website, if you visit the homepage you will notice that is less busy, a pop-up window advertising the latest event is on display and we have moved the Scholarship Endowment Fund to be on the main menu. Exciting things coming up! What do you want to see or have improved on the website? Email us at

For events, there is the Data Analytics Convention on April 19, SPE SPRING 2022 ENERGY PROFESSIONALS HIRING EVENT on April 26, the SPE-GCS Executive Breakfast on April 14.


All the best,

Nii Ahele Nunoo