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Oil and gas investment guru, Kay Rieck, explores the changes in the oil and gas sector due to the war in Ukraine

Oil and gas investment guru, Kay Rieck, is exploring the changes in the oil and gas sector as the Russian invasion rages on in Ukraine. Kay believes that the weathervanes point to change given the turbulence the oil and gas sector has endured recently, further complicated by the Russian invasion of Ukraine

Kay lends his intellectual knowledge of the sector to suggest that It is incredibly hard to write something about the oil and gas sector in the current climate, because no matter how the position changes, it’s the people of the Ukraine that are suffering the brutality of an unprovoked, and increasingly seemingly ill-conceived, invasion.

''As I’ve mentioned previously, while the high prices of oil and gas are in the short term very good news for the oil and gas industry, in the long term there is a decent chance they will accelerate the move away from hydrocarbons and increase the speed of uptake of alternatives,'' said Kay. ''In the case of electric vehicles, in many cases of course they will still be charged by electricity that is generated via natural gas, but the industry needs to be honest with itself: in the long-term the weathervanes point to change.''

Kay Rieck believes that a further issue of the high prices came to light over the last couple of weeks, with the price of oil rising to around USD125 per barrel before coming back down to around USD95 before climbing again to its current level of around USD110. Removing the politics from the situation as much as one can, this volatility is good for traders because it creates a chance for the very best of them to sense when the wind is changing and make a turn on their portfolios.

Speaking about this, Kay said: "The decision on when to drill for oil is based on a variety of factors, but one of the biggest is that it obviously has a massive impact on the returns you can expect to receive from the natural resources that you bring to the surface. The higher the price of oil, and to a lesser extent gas, the more it is worth pursuing deposits in harder to reach areas. It’s the market at its most efficient, but unfortunately the geopolitics of the situation is getting in the way.''

The carrot and the stick

All this said, from Kay's professional opinion is that the high demand for oil and gas is likely to drive innovation and potentially tighten policies around the well-head. There are several emerging technologies that are making it more simple to manage extraction processes more efficiently.

''During a period of great volatility and considerable uncertainty where exploration and production companies are uncertain about whether to commit to drilling in harder to reach, more expensive areas, it becomes worth examining how you can make the most of what you are already bringing out of the ground and tightening discipline on site to minimise waste'', he said.

Kay Rieck notes that at the same time, regulators in some countries have been trying to tighten their grip on oil and gas operators and create ways to force them to reduce wastage. They are increasingly turning to technologies such as drones, flying them over extraction sites with arrays of sensors so that they can track leaks that could be in violation of local bylaws.

About Kay Rieck

Kay Rieck has been active on the investment side of the oil and gas sector for more than two decades. Starting his career as a financial adviser and stockbroker on the New York Stock Exchange, he quickly developed an interest in natural resources and associated assets building his expertise with investment banking and asset management roles at the New York Board of Trade and the Chicago Board of Trade. Utilising his exceptional network of global contacts, he started his first exploration and production company in the US in 2008, selecting investments across the Haynesville Shale, Permian basin, Eagle Ford shale, Dimmit county and elsewhere that offered exceptional prospective returns.

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