CERAWEEK: Biden ban on US imports of Russian oil and products 'makes sense' in short term: ConocoPhillips CEO

The US ban imposed March 8 by President Joe Biden on importing Russian oil, gas and products "makes sense," at least for now, given Russia's invasion of the Ukraine and the bloodshed and global turmoil it has caused in the past nearly two weeks, the top executive of ConocoPhillips said, minutes after Biden's announcement.

But longer-term, a Russian oil/gas import ban serves to hasten a much-needed conversation for energy security and national security and the impact to US energy supplies if the Russia-Ukraine conflict drags on for a long period of time, CEO Ryan Lance said at the CERAWeek by S&P Global conference in Houston.

"It makes sense in the short term to send a message to Vladimir Putin" about the Russian leader's invasion of its neighboring country which began Feb. 24, Lance said. "So it makes ... sense to do so."

Current oil price volatility stemming from that war, which has driven up the price of WTI crude oil more than 25% to over $128/b on March 8, is probably not enough to upset the US oil markets for too long, he said, adding they likely "will calibrate itself reasonably quickly."

But if the war in Ukraine drags on for many months or a year or more, a different plan is necessary to assure sufficient oil supplies will be available at affordable prices, he added.

"We need to start thinking about the medium and long term, and how long this conflict could last, and if the rest of the world will stop importing Russian crude and products," Lance said. "We'd better start planning for the scenarios that could develop over that time."

Although he didn't criticize the Biden administration, which has widely promoted climate change measures and halted new domestic lease sales, Lance said there are many governments around the world that "want to drive fossil fuels to zero as quickly as they possibly can."

Slower path to energy transition

He called that mode of thought – which believes the threat of climate change is imminent in the next handful of years and needs to be accomplished in a short period of time – a "cliff transition."

But Lance said there are better ways to manage the energy transition from fossil fuels to renewables.

Those who advocate a "cliff transition" to fossil fuels typically want a pivot to renewable and cleaner, low-carbon energy solutions "immediately – in say, the next five to 10 years," he said. "That's just not gonna happen."

That would create economic hardship and higher prices – the very opposite of what its proponents intend, he added. "So the system needs to be changed along "a more managed pathway," Lance said.

For ConocoPhillips and many other upstream companies, the preferred method of management is a gradual transition while continuing to produce oil and natural gas, but only the lowest-cost barrels and BTUs, so they remain affordable to consumers.

And meanwhile, those barrels need to generate a high rate of return on capital. That is the path that much of industry is following today.

"There's a place for renewables, for nuclear, for fossil fuels, for natural gas, and there's probably nature-based solutions that make sense, and oil that will be required," Lance said. "And you need a pathway to net-zero" greenhouse gas and methane emissions."

"There's a better-managed way to do this," he said.