Russian war alters energy transition forecasts

In recent times, the debate on climate change has assumed profound global attention, especially on the need to reduce the burning of fossil fuels. The arguments seem to have changed slightly following the Russian invasion of Ukraine. Now, even CEOs of international oil companies (IOCs) are warning that the energy transition should not be pushed at a drastic pace.

In the last one year, I published two articles on the climate change debate, suggesting that contrary to global and widely held opinions, the imminent end of natural gas as a fuel is not in sight. Now the world can see how the Russian invasion of Ukraine has upended energy policy in Europe and upset oil and gas supply and demand forecasts.

Forecasts are informed guesses at best, albeit arrived at through rigorous processes. We saw this in forecasting the potential and growth of nuclear energy, where, in spite of the hype, nuclear plant accidents led to the decisions to reduce and even abandon nuclear energy sources in certain jurisdictions.

Italy, Japan, and Germany are examples. With the Russian war in Ukraine, nuclear is being promoted again. The object lesson here is that oftentimes forecasts and targets are frustrated by unforeseen circumstances.

Only last November, 197 countries met in Glasgow for COP26 to address global warming and climate change. Great emphasis and attention was laid on the need to reduce the burning of fossil fuels, which would then reduce the emission of carbon and greenhouse gases. Focus was to shift to the development of sources of renewable energy, such as sun, wind, hydro and biomass.

A decision was taken to “phase down” not “phase out” the use of coal which emits more carbon than oil and gas, much to the disappointment of climate change champions and countries most impacted by the phenomenon of global warming.

New emission reduction targets were set, in order to compel the world to speed up the use of renewable fuels and phase out the burning of fossil fuels. The decisions reached at COP26, following apparent consensus on various strategies designed to cut carbon and greenhouse gas emissions, the world appeared to be on course to increase investments in renewable energy, and reduce investment in fossil fuels. The major international oil companies keyed into the COP26 decisions.

In response to the Russian invasion, crippling sanctions have since been clamped on Russia by the developed world. One of the major decisions was to reduce or terminate oil and gas imports from Russia.

Consequently, Europe was to wean itself off gas supply from Russia, its traditional supplier, over the next three years. As a result of this boycott, there has been a severe shortage of gas supply to Europe. Even coal mines are being reopened as a result of the crisis.

As gas prices rise ahead of imminent winter in the northern hemisphere, gas supply is already under pressure, driving up inflation worldwide, with wealthy countries witnessing unprecedented levels of inflation rates and even fearing an onset of recession. Clearly, the consequence of harsh economic sanctions against Russia is being felt worldwide.

The EU’s decision to wean Europe off Russian gas was contrary to the climate change calculations in Europe, especially for Germany, the largest economy in Europe. We would use Germany in this article to demonstrate the extent of the challenge the developed world, and indeed the whole world, faces in achieving green energy targets by 2050.

Germany is now in a particularly difficult situation, and happens to be among the nations that set ambitious targets for reduction of emissions from fossil fuels, especially coal. Its plans for transition into renewable energy sources, especially wind and solar, were aggressive.

Only last January, it announced plans to address a drastic deficit in the country’s efforts to cut emissions. The measures focused on expanding renewable energy capacity with a view to reaching 80% renewable energy sources for electricity generation by 2030, and achieving greenhouse neutrality by 2045.

At that time, the German government announced that it would need more gas-fired power plants as a “backup” solution in case supplies from renewable energy sources would not be sufficient. It had earlier decided to shut its nuclear plants as a result of safety questions pertaining to nuclear energy.

Having shut its coal plants and weaning itself away from nuclear energy, Russian gas was to play a major part in Germany’s energy mix, while renewable energy projects were to be pursued vigorously. In this regard, it has so far achieved 40% in renewables.

Before the Russian invasion of Ukraine, the German government had planned to accelerate the coal phase out by bringing the target date back from 2038 to 2030. With the present situation these plans will be in question, considering that in 2020, about a quarter of Germany’s electricity production came from coal.

Because natural gas accounts for 25 percent of Germany’s total primary energy consumption, with developments in Russia, Germany, indeed, Europe now needs oil and especially gas.

As a result of the gas supply crisis, it has recently launched an Energy Saving Ordinance, a set of far reaching measures to reduce energy consumption and restrictions on usage of gas. In a major policy reversal, Germany will now increase the burning of coal.

Germany is now generating nearly a third of its electricity from coal as it scrambles to replace Russian gas before winter as electricity generation from gas has reduced. In a bid to cut energy bills, in Spain, residents are limiting heating and boiling kettles to shower as the country struggles with reduced Russian gas supply.

Unfortunately, as a result of under-investment in oil and gas projects in recent years, a global gas supply crisis started in 2021.

In an attempt to discourage new investments in fossil fuels, activists and shareholders in oil and gas companies pushed for the companies in which they held equity to show evidence that they were reducing, not only their current levels of production, but were not to make new investments in oil and gas exploration. Some financial institutions decided not to fund development and production of oil and gas projects.

Now competition for gas has been driven to an all-time high. The limited uncommitted Liquefied Natural Gas (LNG) production capacity globally, and European pipeline gas (from Norway especially) is not able to replace all Russian gas imports into Europe.

Unfortunately, LNG is sold mainly on long-term contracts and much of the available capacity is committed. In any case, even if spare volumes of LNG are available for sale to Europe, there are insufficient LNG receiving and re-gasifying terminals in Europe to receive them. These terminals would normally take at least three years to be built. Nevertheless, German utilities are now signing long-term LNG supply contracts.

To address this challenge, Germany has recently announced plans to build five Floating LNG (FLNG) terminals by the end of the year. These Floating LNG terminals, will have storage and re- gasification facilities, and are now been rushed to be built in seven months. With the new urgency, Environmental Impact Assessments (EIAs) are being skipped.

These regulatory processes would normally take several months to obtain regulatory approval. As a result of the urgency, this process is being skipped. The ability of other European LNG terminals to take the LNG on offer is limited.

As a result, some other European countries have also announced plans for the construction of FLNG terminals. It is suggested that the high level of new investments required to ensure sufficient gas supply into Europe could derail Europe’s, if not global, green energy transition targets.

As short term remedial measures to mitigate the energy crisis, coal fields hitherto abandoned are being re-opened, and even major international oil companies (IOCs) and governments are now looking for new sources of oil and gas globally, to replace oil and gas supplies from Russia.

Even OPEC is being urged to increase crude oil production. It would appear that fossil fuels, especially gas, rather than being reduced, are coming back. Whereas developments in renewable energy sources continue to be pursued aggressively, new sources of oil and gas had to be found.

The energy crisis has also pushed more investments to renewable energy sources and this has seen rising costs in renewable-energy projects, mainly wind and solar power.

The EU has embarked on a scramble for additional supply of natural gas from around the globe. The scramble for African gas reminds one of the Berlin Conference of 1884- 1885 at which the Scramble for African colonization was decided.

Read also: Osinbajo calls for just energy transition as OPTS marks 60th anniversary

EU delegations have been in Algeria, Nigeria, Angola and Congo in search of additional gas supply sources. Algeria and Egypt have recently signed new gas deals to supply Europe. Even the undeveloped offshore Mediterranean gas fields of Israel and Greece have become potential supply sources.

In Nigeria, new interest has been rekindled in the long suspended Trans Saharan pipeline project designed to supply gas to Europe through Algeria, as well as new gas supply project to Europe through Morocco. The Nigeria LNG is already supplying gas to some European countries, Italy, Spain, Portugal, and France. At least 40 percent of its production goes to Europe.

As part of the European quest for new gas supplies, Samuela Isopi, EU ambassador to Nigeria led a delegation to NNPC last April. Even NLNG was approached directly for additional LNG import into Europe. Tragically, unlike other oil producers, Nigeria is not benefitting from the oil and gas demand spike and price windfall revenues.

Nigeria’s ability to increase both oil and gas production has been degraded by lack of investment over the years, oil theft, crude oil pipeline vandalism and sabotage. Investments in oil and gas projects have been stalled in recent years while investors waited for the Petroleum Industry Bill (PIB) to be passed into law.

We cannot meet our OPEC crude oil production quota. Gas production has diminished to the point that we are not supplying enough gas to NLNG for processing up to the level of installed capacity. LNG export has reduced as a consequence.

In contrast to Nigeria, the IOCs are reaping huge revenues and are now able to invest more in renewable energy sources from cash derived from windfall profits. Nigeria does not have that prospect not to talk of luxury.

IOCs are doubling revenues and returns to shareholders who, a year ago, were aggressively calling for reduction in fossil fuel production. To ease the energy crisis, the UK oil and gas producers have called for more investments and for more drilling licenses in the North Sea and rapid investment in the sector.

Natural gas imports would be needed in Europe for a while perhaps up to nine years as stated at the last month’s Gastech conference in Milan. The COO of ENI, one of NNPC’s joint venture companies spoke of plans to invest about $4.47b per annum for new gas supplies from Qatar, Congo, Egypt, and Algeria to replace Russian gas by 2025. No mention was made of Nigeria.

Fossil fuels are again back in favour and Nigeria must up its game in oil and gas projects and new investment, otherwise we will be left behind. Even OPEC is being urged by the G7 countries to increase oil production. The anti-fossil fuel lobby has gone quiet. How times can change so quickly.

For Nigeria, we need to get our oil and gas facilities producing to installed capacity, so we can increase badly needed dollar revenues. For this we do not need massive foreign investment but to maintain already installed facilities. Nigeria must not take its eyes off the need to push for investment in renewable energy. The whole world is headed in that direction.

Ihetu, a former MD of the NLNG, is the author of the book, From

Oloibiri to Bonny: My Life and Insights from Rising and Leading in Nigeria’s Petroleum Industry

In recent times, the debate on climate change has assumed profound global attention, especially on the need to reduce the burning of fossil fuels. The arguments seem to have changed slightly following the Russian invasion of Ukraine. Now, even CEOs of international oil companies (IOCs) are warning that the energy transition should not be pushed at a drastic pace. In the last one year, I published two articles on the climate change debate, suggesting that contrary to global and widely held opinions, the imminent end of natural gas as a fuel is not in sight. Now the world can see how the Russian invasion of Ukraine has upended energy policy in Europe and upset oil and gas supply and demand forecasts. Forecasts are informed guesses at best, albeit arrived at through rigorous processes. We saw this in forecasting the potential and growth of nuclear energy, where, in spite of the hype, nuclear plant accidents led to the decisions to reduce and even abandon nuclear energy sources in certain jurisdictions. Italy, Japan, and Germany are examples. With the Russian war in Ukraine, nuclear is being promoted again. The object lesson here is that oftentimes forecasts and targets are frustrated by unforeseen circumstances. Only last November, 197 countries met in Glasgow for COP26 to address global warming and climate change. Great emphasis and attention was laid on the need to reduce the burning of fossil fuels, which would then reduce the emission of carbon and greenhouse gases. Focus was to shift to the development of sources of renewable energy, such as sun, wind, hydro and biomass. A decision was taken to “phase down” not “phase out” the use of coal which emits more carbon than oil and gas, much to the disappointment of climate change champions and countries most impacted by the phenomenon of global warming. New emission reduction targets were set, in order to compel the world to speed up the use of renewable fuels and phase out the burning of fossil fuels. The decisions reached at COP26, following apparent consensus on various strategies designed to cut carbon and greenhouse gas emissions, the world appeared to be on course to increase investments in renewable energy, and reduce investment in fossil fuels. The major international oil companies keyed into the COP26 decisions. In response to the Russian invasion, crippling sanctions have since been clamped on Russia by the developed world. One of the major decisions was to reduce or terminate oil and gas imports from Russia. Consequently, Europe was to wean itself off gas supply from Russia, its traditional supplier, over the next three years. As a result of this boycott, there has been a severe shortage of gas supply to Europe. Even coal mines are being reopened as a result of the crisis. As gas prices rise ahead of imminent winter in the northern hemisphere, gas supply is already under pressure, driving up inflation worldwide, with wealthy countries witnessing unprecedented...


In recent times, the debate on climate change has assumed profound global attention, especially on the need to reduce the burning of fossil fuels. The arguments seem to have changed slightly following the Russian invasion of Ukraine. Now, even CEOs of international oil companies (IOCs) are warning that the energy transition should not be pushed at a drastic pace. In the last one year, I published two articles on the climate change debate, suggesting that contrary to global and widely held opinions, the imminent end of natural gas as a fuel is not in sight. Now the world can see how the ...


In recent times, the debate on climate change has assumed profound global attention, especially on the need to reduce the burning of fossil fuels. The arguments seem to have changed slightly following the Russian invasion of Ukraine. Now, even CEOs of international oil companies (IOCs) are warning that the energy transition should not be pushed at a drastic pace. In the last one year, I pub...


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