Will a Geopolitical Conflict Accelerate Energy Transition in Oil-Importing Countries? A Case Study of the Philippines from a Real Options Perspective

Geopolitical conflicts, involving a major player in the world market, affect prices of oil and commodities, particularly oil-importing countries. Consequently, unprecedented changes impact investments energy transition projects. This study aims to analyze dynamics investment decisions under uncertainties geopolitical risks. research applies Black-Scholes-based real options valuation value flexibility postponing considering repercussions Russia-Ukraine war. Applying proposed model case Philippines, result with net present USD 231 million for 1 GW capacity shows that is viable project when cost savings from using fossil fuels renewables are considered. On other hand, finds higher 990 million, which implies better decision postpone project. The uncertainty conflicts further increases this causing longer waiting period implement Sensitivity analysis results robust explanatory variables. Results provide policy implications on making an country self-sufficient economic shocks.