London Daily

Focus on the big picture.
Friday, Jun 20, 2025

Oil and gas companies are looking at a bonanza from the Ukraine war

Oil and gas companies are looking at a bonanza from the Ukraine war

Analysis: fear of shortages gives fossil fuel companies leverage with governments that could be disastrous for the climate

Oil and gas companies are facing a potential bonanza from the Ukraine war, though few in the industry want to admit it, and many are using soaring prices and the fear of fuel shortages to cement their position with governments in ways that could have disastrous impacts on the climate crisis.

“There is a huge opportunity for oil and gas companies, though I’m sure it is not one they would have chosen,” said Robert Buckley, head of relationship development at Cornwall Insight, an energy analysis company. “They have the opportunity to reposition themselves [as crucial to policymakers]. There is going to be a very high price for oil for a very long time, and even the prospect of physical shortages.”

Oil prices have leapt dramatically, to more than $130 a barrel, sending petrol prices in the UK to more than 155p a litre, while gas prices have also surged.

Luke Sussams, of Jefferies investment bank, said: “The high-price environment is likely to last a long time. Boris Johnson has said that alongside the accelerated deployment of renewables will be greater production from the North Sea. There is the potential for growth prospects and upside [for fossil fuel producers].”

The EU, the UK and the US have all announced drastic restrictions on imports of oil and gas from Russia, which will affect the EU most as about 40% of EU gas comes from Russia, but will hurt all countries as prices are set internationally. Those governments are now urgently seeking ways to protect their energy security, through ramping up renewables and seeking alternative sources of oil and gas supply.

Opec, and Saudi Arabia in particular, are the obvious ports of call, but have been so far been reluctant to commit to increased production. This could change, as the FT reported that the United Arab Emirates’ ambassador to the US favoured an increase, news which sent oil prices down about 11% from their peak.

But the crisis gives western oil and gas companies such as BP, Shell, Exxon and Total leverage among governments. In the UK, prime minister Boris Johnson defended oil companies against calls for a windfall tax on Wednesday from Labour. He said: “The net result of that would be to simply see the oil companies put their prices up yet higher and make it more difficult for them to do what we need them to do … divesting from dependence on Russian oil and gas.”

Robin Baillie, partner in the energy group at the international law firm Crowell and Moring, said: “Governments around the world are looking for short-term solutions to finding an alternative to Russian energy, and the North Sea is an obvious one for the UK, until such time as more renewables come online.”

New oil and gas fields take years and even decades to come into production, so even if companies begin to expand their exploration immediately it will not reduce current prices. Big oil and gas companies are now awash with cash, which they could use to invest in pumping more from existing fields, and exploring new fields.

Green campaigners warned that oil and gas companies were using the Ukraine emergency to further their own interests, by encouraging governments to prioritise oil and gas production and make decisions now on investments that would have little impact on the current crisis but would vastly increase fossil fuel use for years to come.

Marc van Baal, of Follow This, a group of 8,000 green shareholders in oil and gas companies, said: “The leaders of oil and gas companies really have shown in the last years that they want to hold on to their old business model. This is what they understand – turning hydrocarbons into petro-dollars. So I am afraid this is what they are telling governments they should do.”

Tessa Khan, director of Uplift, which campaigns to end North Sea fossil fuels, said: “It’s shameful that oil and gas companies, some of whom have profited from their Russian partnerships for years, now seek to use this humanitarian crisis to further their interests. The fact that they are still being listened to by governments, the UK’s included, is beyond belief.”

A stark reminder of the likely consequences of further dependence on oil and gas came from the International Energy Agency, which reported on Tuesday that greenhouse gas emissions had shown the highest ever annual increase in 2021. The global energy watchdog found that energy-related carbon dioxide emissions, which make up the bulk of greenhouse gases, had risen by 6% in 2021 to 36.3bn tonnes, their highest-ever level, as the global economy rebounded from the Covid-19 pandemic, relying heavily on coal to power the growth. The increase in global CO2 emissions was more than 2bn tonnes, the largest in history in absolute terms, outweighing the decline in emissions seen during the lockdowns of 2020.

Renewable energy and energy efficiency offer alternatives to oil and gas, which the UK, the EU and the US are also pursuing. But if fossil fuel companies make decisions now to expand exploration and production, that will continue to result in high emissions for years and decades to come.

Lori Lodes, executive director of Climate Power, a campaigning group in the US, said: “More drilling in more places isn’t a short-term fix, it’s a long-term problem that only makes oil and gas CEOs richer and locks us into more dependence on dirty, unreliable, expensive and volatile fossil fuels.”

Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×