Page 10 - MEOG Week 07 2021

MEOG FINANCE & INVESTMENT MEOG

Petrostates to lose trillions of dollars in

revenues amid clean energy push: report

GLOBAL A new report estimates that the shift towards past decade. Suriname is set to see the biggest
lower-carbon energy will cost oil and gas pro- percentage shortfall of 94%, as most of its oil
ducing countries trillions of dollars in govern- reserves are yet to be developed, followed by
ment revenues over the next two decades. Timor-Leste, Colombia, Cameroon and Sudan.
The findings by Carbon Tracker are a Among countries in the former Soviet Union
“wake-up call” for countries heavily reliant on oil (FSU), Ukraine is set to see a 74% shortfall, while
and gas to fund public spending to diversify their Azerbaijan, Russia and Kazakhstan are antic-
economies. Carbon Tracker has also called on ipated to have deficits of 68%, 47% and 41%.
richer states to help those with weaker finances Turkmenistan is near the bottom of the rankings,
to make the transition towards cleaner energy. with a shortfall of only 2%.
The Beyond Petrostates report focuses on 40 In the Middle East, the country expected to
countries with the greatest fiscal dependence on have the biggest shortfall is Bahrain, of 70%. It
oil and gas revenues. These so-called petrostates is followed by Oman (54%), Egypt (45%), Saudi
are predominantly in the Middle East, North and Arabia (44%), Qatar (41%), Iran (39%), Kuwait
West Africa and South America. They stand to (38%), the UAE (34%), Iraq (30%) and Yemen
see a 51% drop in these revenues as the world (0%).
makes the transition to renewables and other Carbon Tracker then assesses countries’
low-carbon energy sources. vulnerability to the energy transition based on
While hydrocarbons will continue to domi- their dependency on these revenues. The coun-
nant the world’s energy mix for decades to come, tries ranked as the most vulnerable in Tier 5 are
the International Energy Agency (IEA) and Angola, Azerbaijan, Bahrain, Equatorial Guinea,
others have slashed long-term demand fore- Oman, South Sudan and Timor-Leste. The least
casts over the past, in light of the coronavirus vulnerable countries in Tier 1 are Colombia,
(COVID-19) pandemic and an accelerated push Egypt and Papua New Guinea. Myanmar, Turk-
by countries to decarbonise their economies. menistan, Ukraine, Uzbekistan and Yemen have
This has led to producers reducing their price no ranking because of a lack of data.
predictions and writing off billions of dollars of The biggest producers in the FSU region,
production assets no longer viewed as commer- Russia and Kazakhstan, are both ranked in Tier
cially viable. 3. In the Middle East, Iran, Qatar, the UAE are
“Populations that are heavily reliant on fos- Tier 3, while Iraq, Kuwait and Saudi Arabia are
sil-fuel production face lower government in Tier 4.
revenues and job losses as the pace and inevita- Some 400mn people live in the 19 most vul-
bility of the energy transition increases,” Carbon nerable petrostates, rated as Tier 4 and 5, and ten
Tracker states. of these countries are categorised as “low” in the
“Compared with industry expectations, UN Human Development Index.
petrostates’ government revenues would be $9 “The populations of economies that are heav-
trillion lower over the next two decades under ily reliant on fossil-fuel production are perhaps
the low-carbon scenario. The majority of this the most obvious examples where the transition
decrease is driven by lower prices, rather than will also have some negatives, for example, lower
lower volumes.” government revenues and job losses,” Carbon
The report, which will be launched on Feb- Tracker says. “Decisive and forward-looking
ruary 24, attempts to quantify the potential policies will be required to prevent and mitigate
shortfall in revenues under a low-carbon sce- these impacts, both on the part of domestic poli-
nario compared with budget receipts over the cymakers and the overseas community.”™

P10 www. NEWSBASE .com Week 07 17•February•2021