- The war in Ukraine has caused a surge in oil and gas prices, affecting the global economy and energy security.
- The oil and gas industry is facing job losses, wage cuts, and skill shortages due to supply disruptions, sanctions, and geopolitical risks.
- The war in Ukraine may also create job opportunities for the industry to diversify, innovate, and transition to cleaner energy sources.
The war in Ukraine, which started on February 24, 2022 when Russia launched a military invasion of its neighbor, has had far reaching consequences for the world. Among them, the impact on the oil and gas industry has been significant and complex.
The oil and gas industry is a major employer in many countries, both directly and indirectly. According to Accenture, the industry employs about 10 million people globally, and supports another 40 million jobs in related sectors. The industry also provides income and livelihoods for millions of people around the world.
However, the industry is also facing many challenges and uncertainties. The war in Ukraine has exacerbated some of them, such as:
- Job Losses: The war in Ukraine has threatened the stability of oil and gas supplies from Russia, which is one of the largest producers and exporters of both commodities. Russia supplies about 40% of Europe’s natural gas needs, mainly through pipelines that cross Ukraine. Any interruption or reduction of these flows could have serious consequences for Europe’s energy security and economy. Moreover, Russia has also restricted gas deliveries to some EU member states that have imposed sanctions on it. The war in Ukraine has also increased the risk of attacks on oil and gas infrastructure in the region, such as pipelines, refineries, and terminals. These factors could lead to job losses or wage cuts for workers in the oil and gas industry, especially those who are directly involved in production, transportation, or distribution. According to AlphaSense, a market intelligence platform, demand will eventually outweigh supply, causing crude oil and natural gas intensive sectors to drastically scale back or halt production altogether—consequently leading to a fall in the GDP. The global labor market, too, would experience far reaching consequences, ranging from deindustrialization to industry related inflation.
- Skill Shortages: The war in Ukraine has increased the geopolitical tensions between Russia and the West, as well as among other countries that have interests or stakes in the region. The war in Ukraine could escalate into a wider conflict that could involve NATO, China, Turkey, or other actors. The war in Ukraine could also trigger more sanctions on Russia or its allies, such as Iran or Venezuela, that could further limit their access to global markets or finance. The war in Ukraine could also affect the diplomatic relations and cooperation among countries on various issues, such as climate change, trade, or security. These factors could create skill shortages for workers in the oil and gas industry, especially those who have expertise or experience in dealing with complex or uncertain situations. For example, workers who can negotiate contracts or manage projects across different countries or regions; workers who can adapt to changing regulations or standards; workers who can communicate effectively with diverse stakeholders or cultures.
On the other hand, the war in Ukraine may also create some opportunities for the oil and gas industry to adapt and thrive in a changing world. Some of them are:
- Job Creation: The war in Ukraine may encourage oil and gas companies to diversify their sources of supply and demand, as well as their products and services. For example, oil and gas companies may seek to increase their investments or partnerships in alternative energy sources, such as renewables, nuclear energy, or liquefied natural gas (LNG). They may also seek to expand their markets or customers in regions that are less dependent on Russian supplies or more resilient to price shocks, such as Asia or Africa. They may also seek to offer more value added solutions or services to their clients, such as energy efficiency, digitalization, or decarbonization. These actions could create new job opportunities for workers in the oil and gas industry, especially those who have skills or knowledge in these areas. For example, workers who can design or operate renewable energy systems or LNG facilities; workers who can develop or implement digital solutions or platforms; workers who can provide or deliver energy efficiency or decarbonization services.
- Skill Development: The war in Ukraine may stimulate oil and gas companies to innovate and improve their operations and performance. For example, oil and gas companies may seek to enhance their efficiency and productivity by adopting new technologies or practices that reduce costs or emissions. They may also seek to develop new capabilities or skills that enable them to cope with uncertainty or complexity. They may also seek to foster a culture of innovation and learning that encourages creativity and collaboration among their employees or stakeholders. These actions could enhance the skill development of workers in the oil and gas industry, especially those who are willing or able to learn new things or work in new ways. For example, workers who can use or apply new technologies or tools; workers who can solve problems or make decisions in complex or uncertain situations; workers who can innovate or collaborate with others.
The war in Ukraine is a moment of reckoning for the oil and gas industry. It poses significant challenges and uncertainties, but also offers opportunities and incentives for the industry to become stronger, more agile, and more responsive to global circumstances. The oil and gas industry has the potential to play a key role in ensuring energy security, economic growth, and climate action in the world. The war in Ukraine is a test of its resilience and relevance in a fast changing energy world.