Consequences of war in Ukraine

At the time of writing in the third week of the Russian invasion of Ukraine, it is impossible to predict the endgame. But already this is a humanitarian crisis on a scale not witnessed in Europe since the Second World War, a mass exodus of millions of people fleeing the death and destruction of a brutal and unprovoked attack on their country.

Commendably the EAGE Board put out a statement condemning this needless war and supporting international action to bring it to a peaceful close as soon as possible. As a matter of record, our sister society, The Geological Society of London, which counts plenty of EAGE members, did the same thing issuing a strongly worded condemnation of the Russian action.

There is a cold logic to saying that if comment is to be made, then professional societies should condemn all wars equally wherever they occur. More speciously, it could be argued that no public declaration should be made because a professional scientific society should remain aloof from politics.

Neither argument is tenable in this case or may be in any case. Morally there should be no distinction between a ‘just’ and an ‘unjust’ war. Mahatma Ghandi put it well – ‘What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy.’

Modern ‘just war’ theorists argue about the definition but recognise the contradiction. The compromise to account for a nation feeling justified in resorting to violence and killing is to talk about a ‘necessary war’ against some incontrovertible evil, e.g., versus Hitler’s Germany. Governments especially like to fall back on what might be termed the jurisprudence of war. Engaging in hostilities can be justified if sanctioned by international consensus, for example in the United Nations. Unfortunately in modern times, failure to gain UN approval has not always discouraged countries from attacking each other.

Ultimately attitude to a war is situational. The chorus of international denounciation, backed by the severest economic sanctions every ever inflicted on a country, underlines that the Russians’ brutal incursion into Ukraine is beyond reason. Not that it makes the action any more palatable, but one must assume that President Putin completely misjudged the reception his ‘liberation’ army might receive in Ukraine and the extent of the international opprobrium the assault would meet.

This is of course painful and personal for the EAGE. It is happening in Europe, where the Association has its roots, with members on both sides of the conflict. Our thoughts must be with geoscience colleagues in Ukraine and the Kyiv local chapter in particular. At the same time the Association has a thriving Moscow office providing events and services to the Russian geoscience community. It is not clear where the loyalties of individual geoscientists in Russia lie. In an era of disinformation exacerbated by war, we are unlikely to find out. However, given the example set by others, the EAGE Board had little option but to protest Russian aggression by suspending for the time being all commercial dealings with Russia.

Although not a perfect solution, the Board is allowing Russians to continue attending EAGE international events as individuals, in a belief that support for the Ukraine campaign is not universal in Russia. It is about as close as you can get to enabling science to transcend politics.

The reality is that geoscience activities, research and operations, cannot be neatly sequestered from the current turmoil. It is a little bit analogous to the ‘don’t mix politics with sport’ advocates epitomized by the International Olympic Committee (IOC). The IOC, a self-regulated, self-appointed body accountable only to itself, a long time ago accorded itself the mission to bring nations together in sport and peace. Yet it continues to invite widespread criticism by collaborating with authoritarian regimes, most recently at the Winter Games in Beijing, China where human rights abuses caused diplomatic representatives of numerous countries to boycott the proceedings. So much for the absence of politics.

Many geoscientists in Russia work on a daily basis in the oil and gas business. They will be impacted by the rapid retreat from Russia by the supermajors because of an ugly turn in Russian policy. That, however, is a minor if unfortunate consequence compared with the suffering in Ukraine.

Beyond the battlefield, it seems no exaggeration that the current upheaval in the energy and commodities markets threatens global economic, social and political order. Industry and commerce the world over was already on edge coping with the Covid-19 pandemic disruption. In the energy sector there are numerous scenarios to consider depending on how critical expected shortages in global oil and gas become. It is already a surreal world where Europe can castigate Russia for its invasion and impose sanctions, but continues business as usual importing natural gas on which many countries depend for the bulk of their energy needs. Deeply ironic too, that the explosion in prices caused by the crisis provides Russia with bonus revenue to fund its military exploits.

There is little point in trying to guess how the short-term oil and gas supply issues will be handled. There are so many factors in play. No one can predict whether President Putin will at some stage cut off Russia’s gas pipelines to Europe and what measures can be taken to counter such drastic action. We know already that it is touch and go whether European consumers can stay warm until the end of winter from a cost and supply perspective. Meanwhile on the oil front, filling the immediate gap in global supplies has invited calls to Saudi Arabia and the United Emirates to turn up the taps. Others are looking for a review of current sanctions against major oil producers such Iran and Venezuela. And so on … it’s all complicated.

An inescapable takeaway from the current crisis will surely be the need for governments and communities to re-evaluate the continuing necessity of oil and gas in everyday living. It will not just be the staggering rise in the cost of filling up at the petrol station, virtually every aspect of life is due to be affected, from power for industrial production and heating homes to transport and holiday travel. The tentative economic recovery from the pandemic will in many parts of the world be stopped in its tracks.

The question is how this reality will be processed around the world. The plea for increased investment in renewables will doubtless be heard from those in the wealthy western industrialised countries where owning an over-priced Tesla is a badge of climate change responsibility. But such clarion calls may temporarily at least be dulled when the need for hydrocarbons to provide the necessities of life has been brought into such sharp focus. It says something that the immediate reaction of governments in the US and the UK has been to find ways to increase oil and gas production, the priority being to ease the concerns of their electorates.

You can of course add many countries in the developing world to those who may now be reviewing the practicalities of sourcing the energy transition. Poorer nations have long maintained that most such strategies discriminate against poorer countries where basic electricity and access to clean fuels for cooking are often lacking. This is borne out by the fact that serious investment in alternative energy is mainly confined to prosperous industrialised countries.

In our free enterprise world, the dramatic increase in the price of oil may actually work against spending on climate change mitigation. An extreme oil boom and bust cycle could be in play. It makes sense for commercial oil companies to take advantage of the massive profits being generated from high priced crude to get serious about adding new reserves and make up for a decade of E&P under-investment.

Such spending in the current crisis situation could well meet with less popular resistance, even in a period when extreme climate events are becoming frequent. Optimistically the conversation about phasing out of fossil fuels could be less dogmatic and divisive. It would take account of the technological limitations of renewable energy solutions, the modest pace of change and hence the need for a more realistic timeframe for energy transition. Hopefully in this scenario the oil industry can be considered part of the solution.

The agenda of those national oil companies heavily dependent on oil revenues may be different. They will most likely be tempted to increase production after a long period of restraint to benefit from market economics.

The ultimate irony is that more fossil fuels in the market will bring prices down and thus make spending on renewables less attractive.

Obviously the seismic services sector cannot help but wonder whether anything good will emerge from today’s conflict and misery. Nearly a decade of minimal oil company E&P budgets has decimated the business, with the Covid pandemic adding to its woes. The last few weeks have seen PGS and ION Geophysical, two of the remaining venerable industry names still standing, in deep financial trouble and barely surviving.

There is anecdotal evidence that the rates for marine seismic surveys are picking up even if demand is still patchy. Licensing rounds continue to be announced by countries around the world with oil companies apparently prepared to invest, even if selectively in provinces where the country’s political and fiscal regime is stable. Frontier exploration still seems to be off the table but, who knows, that could now change.

It seems unlikely that this trend goes into reverse. But nothing is certain while hostilities continue unabated in Ukraine and the Russian economy, its goods and services, are made subject to increased sanctions and isolation with no clue what retaliation might look like.

‘Ultimately attitude to a war is situational.’

‘An extreme oil boom and bust cycle could easily be in play.’