PETRO STATES AT RISK UNDER LOW-CARBON WORLD

Fossil fuel-reliant countries could see a drop of 51% in government oil and gas revenues in a shift to a low-carbon world over the next two decades.

There is a fundamental shift underway as the global economy begins to decarbonize. Oil powers the economies of petro states, it also funds the vast majority of their government budgets , provides the vast majority of foreign-currency income , and helps cash-strapped governments borrow from foreign creditors by using oil (and oil revenues) as collateral.

Compared with industry expectations, petrostates’ government revenues would be $9 trillion lower over the next two decades under the low-carbon scenario. The majority of this decrease is driven by lower prices, rather than lower volumes.

Petro state fiscal dependence on oil and gas revenue

(fiscal dependence is calculated as government oil and gas revenue as a % of total government revenue)

1. Iraq: 89%
2. Equatorial Guinea: 81%
3. South Sudan: 78%
4. Oman: 76%
5. Bahrain: 72%
6. Libya: 72%
7. Saudi Arabia: 69%
8. Kuwait: 67%
9. Azerbaijan: 64%
10. Angola: 56%
11. Congo: 54%
12. Timor Leste: 52%
13. United Arab Emirates: 52%
14. Nigeria: 45%
15. Brunei: 43%
16. Algeria: 39%
17. Iran: 37%
18. Gabon: 35%
19. Trinidad & Tobago: 35%
20. Qatar: 34%
21. Kazakhstan: 32%
22. Chad: 29%
23. Suriname: 28%
24. Russia: 23%
25. Malaysia: 19%
26. Bolivia: 19%
27. Mexico: 18%
28. Cameroon: 15%
29. Norway: 15%
30. Sudan: 12%

Most Vulnerable Countries

1. Angola: Pop. 33 million
2. Nigeria: Pop. 206 million
3. Azerbaijan: Pop: 10 million
4. South Sudan: Pop. 11 million
5. Bahrain: Pop. 1.7 million
6. Congo: Pop. 89 million
7. Equatorial Guinea: Pop. 1.4 million
8. Timor Leste: Pop. 1.3 million
9. Gabon: Pop. 2.2 million
10. Suriname: Pop. 586,000
11. Iraq: Pop. 40 million
12. Libya: Pop. 7 million
13. Venezuela: Pop. 28 million
14. Iran: Pop. 84 million
15. Guyana: Pop. 786,000
16. Algeria: Pop. 44 million
17. Kazakhstan: Pop. 19 million
18. Chad: Pop. 16 million

• Some of the poorest oil-dependent countries are in complete turmoil like Libya, Venezuela, Nigeria or Iraq.
• Congo, Angola and Iraq are among the countries most at risk from stranded assets. Their economies are heavily reliant on fossil fuels, the profits of which contribute to 52%, 46% and 26% of their economies, respectively.
• The most vulnerable petrostates could find themselves with a lower credit rating and less access to financing further compounding their fate.
• Algeria, Chad, Iraq and Nigeria will be among the first countries to experience political instability as oil producers feel the effects of a transition to low carbon energy production.
• The worst-hit countries could enter “doom loops of shrinking hydrocarbon revenues, political turmoil, and failed attempts to revive flatlining non-oil sectors.”
• Nigeria, Algeria, Chad and Iraq will be the  first to be hit “if the storm breaks” due to their fixed or crawling exchange rates.
• Lower-cost Gulf producers with stronger economic institutions and resources that enable easier diversification, such as the UAE and Qatar, are seen as least susceptible to political upheaval.