The global natural gas market has been more fundamentally changed for the long term than the oil market by Russia’s invasion of Ukraine, Chevron Corp Chief Executive Mike Wirth said on Monday.
The conflict in Ukraine and ensuing Western sanctions upended global oil and gas markets and disrupted supplies from Russia.
Europe has turned away from dependence on Russian gas supplies and has no intention of changing that in the future, Wirth said in remarks at the CERAWeek energy conference.
An attack that disabled the Nord Stream pipeline from Russia to Europe means changes would be long-lasting, he added.
“Gas markets, I think, are structurally changed for the longest,” Wirth said.
Russian oil is still getting to the market, he said, but at different costs, as ships travel longer distances to get Russian crude and fuel to countries that have not imposed sanctions.
That has left the oil market and logistics tight and vulnerable to any unexpected supply disruption, he added.
“There’s not a lot of swing capacity, there’s not a lot of inventory capacity,” said Wirth. “There’s now a lot of constraints … an unexpected event today would create a different balance.”
Wirth said maintaining secure and affordable supplies while at the same time managing the energy transition to the low-carbon industry of the future was “one of the greatest challenges of all time.”
A disorderly energy transition could be “painful and chaotic”, Wirth said.
“We have to be very careful about turning system A off prematurely and depending on a system that doesn’t yet exist and hasn’t been proven,” he said.