Authors

Discussion

Russia’s War in Ukraine and the Interests of GCC Hydrocarbon Producers in the New Realities of the 4th Energy Transition

In a sense, the 2022 Russian aggression against Ukraine was both a gift and a curse for the GCC oil producers. From a short-term perspective, it clearly slowed down the process of 4^th energy transition, extending the age of oil and demonstrating the need for bigger international investments in the upstream sector. Profits from increased oil prices allowed the Arb Gulf countries to alleviate financial losses from previous years and improve their macroeconomic indicators. However, the transition to a new model of global energy consumption was delayed, but not canceled. Moreover, the conflict in Ukraine once again showed that excessive dependence on hydrocarbon resources is a great source of political and economic risks, thus motivating the leading countries to speed up the energy transition and be more precise in their understanding of what they want to achieve. In the long run, this means nothing good for the traditional oil producers of the Gulf: after a short break given to them by Putin’s war in 2022, they once again need to run against time to transform their economies and prepare their oil and petrochemical sectors for the new so-called post-oil era. An additional challenge for the Gulf producers is created by the very nature of the current energy transition: it is not just a response to the challenges posed by climate change, but an attempt to initiate the comprehensive restructuring of the international economy driven by the principles of sustainable development. To successfully integrate into the new “post-oil” economic system, traditional oil producers need to start implementing ambitious and complex economic programs, including measures aimed at the decarbonization of oil and petrochemical production, diversification of their economies, development of sustainable energy sources, and reconstruction of their own energy systems. All of these require substantial funds generated from oil income. Yet, the current situation in the oil market determined – among all - by the aftershocks of Putin’s invasion cannot guarantee their steady flow.

This paper analyzes how the international perception of the 4th energy transition priorities has changed under the influence of oil and gas market shocks caused by the war in Ukraine, assesses the new challenges created by these changes for GCC oil and gas producers, and examines the potential effectiveness of responses offered by the oil and gas industries of the Arab Gulf states to the abovementioned threats.