By Michelle Casady

Law360, Houston (March 8, 2022, 3:50 PM EST) -- As President Joe Biden announced a ban on U.S. imports of Russian oil and gas Tuesday morning, the CEOs of Saudi Aramco, Occidental Petroleum and ConocoPhillips said at a Houston energy conference the Ukraine war has amplified the industry's existing struggles to meet demand.

The Russian invasion of Ukraine is complicating an already-tight market, and accelerating the "energy crisis" spurred by years of underinvestment as well as the effects of the global pandemic, Amin Nasser, president and CEO of Saudi Aramco said at the CERAWeek by S&P Global conference, an annual energy conference taking place in Houston this week.

"Mixed signals have only added to the chaos," he said. "For example, oil and gas investments are being discouraged ... while demands are being placed on our industry to increase production."

Last week, the Biden administration and members of U.S. Congress last week had called Ryan Lance, chairman and CEO of ConocoPhillips, to discuss the possibility of banning Russian oil and gas imports, Lance said Tuesday. He told the crowd he believed it was the right move to send a message to Russian President Vladimir Putin.

"It's not enough to probably upset the U.S. system, but the one thing we need to start thinking about is the medium- and long-term a little bit," he said. "Heaven forbid this lasts a year or more, but we need to start thinking about it. We better be planning for what this looks like."  

The situation is unprecedented, said Vicki Hollub, president and CEO of Occidental Petroleum.

"It's a dire situation" she said. "We've never faced a scenario where we need to grow production when supply chains ... are still being impacted by the pandemic. So, we've got that challenge. The second challenge we have is everyone came into this year wanting to keep production pretty much flat and no one prepared in advance for growth this year as part of the recovery."

Hollub also said there wasn't a robust enough response from the world when industry leaders warned of the coming tightness in the market, but ears opened after the price per barrel surpassed $100.

"I think the best way to have geopolitical leverage in the world is to be energy independent," she said. "Have we ever had to admit that more than we're admitting that today?"

In the wake of the ban on Russian imports of oil and gas, some U.S. lawmakers have discussed a ban on U.S. exports of oil, which Lance characterized as "the stupidest thing you can ever imagine."

"We want to stay connected and that's the best way to ensure your energy security," he said. "So any conversation around banning exports is incredibly shortsighted and will have the opposite effect of what they think will happen. There's just a lot of energy illiteracy."

Nasser, who has warned before that he believes the spare capacity for oil production is exaggerated, said that even before Russia's invasion of Ukraine, the market wasn't well positioned to "absorb supply shocks."

"Before the Ukraine crisis, spare capacity was declining fast and it required a huge investment," he said. "Who's going to do all these investments in an environment like we are in? We're talking about billions of dollars ... Policymakers were not encouraging any type of investment. We have seen demand is picking up and alternatives are not ready to [meet the demand]. As such, we have an energy security crisis right now."

--Additional reporting by James Arkin. Editing by Lakshna Mehta.

For a reprint of this article, please contact reprints@law360.com.