Left behind: emerging oil and gas producers in a warming world

ABSTRACT

The push for decarbonization is dampening resource prospects in nations with undeveloped oil and gas. It is critical to reduce greenhouse gas (GHG) emissions from the petroleum sector, but there are equity issues related to requiring a shift away from oil and gas before development gains are made, especially in countries that have contributed very little to historical emissions. We review the prospects for five emerging producers to produce oil and gas at the lowest emissions intensity while achieving their economic and environmental goals. We find they lack the required capacity for stringent emissions management and to manage transition risks. The low-carbon pathway presents its own challenges with plans that lack national specificity and offer no substitute to the fiscal potential of the petroleum sector, and a lack of supportive technical assistance and finance. A just transition (JT) approach in these countries will not be about reskilling as they move away from a petroleum dependent economy, but instead about engaging with citizens to break the mould of petroleum-led development expectations and defining the new pathway for development. These countries will require support for transition planning that ensures that any oil and gas production minimizes GHG emissions, and limits the risk of economic lock-in, to invest in broad-based benefits and in a credible shift to a low-carbon economy. Inadequate international support risks leaving some countries behind, or to essential changes being contested in the transition.

Key policy insights

• Emerging producers are not yet dependent on the petroleum sector, and are broadly energy poor, climate vulnerable, lower income countries.

• These countries hold high aspirations for the petroleum sector to address their development needs.

• The growing consensus that there should be no new oil and gas projects creates perceptions by emerging producers of injustice around the transition and could result in change being contested or some countries being ‘left behind’.

• A just transition approach for these countries will minimize the oil and gas resource curse and its economic lock in, to ensure the sector is developed with broad societal benefits that do not increase national emissions.

KEYWORDS:

• Petroleum
• energy transition
• energy access
• equity
• emissions reduction
• global south

Acknowledgements

The authors are grateful to Patrick Heller and Glada Lahn for their thoughtful contributions to earlier versions of this article, to Chris Aylett and David Manley for producing interesting figures, and to Kirsten Jenkins and the anonymous reviewers for their time and their valuable comments, which helped us to improve the quality of the manuscript.

Notes

1 In this article, the terms petroleum sector and oil and gas sector are used interchangeably.

2 The NPG is a non-profit voluntary association of governments from 26 countries that are new to the oil and gas sector. The overriding objective is to enable countries to develop more robust strategies to manage their natural resources, build sustainable economies, and navigate energy transitions. The community of practice is co-organized by the Natural Resource Governance Institute and the Commonwealth Secretariat.

3 The list of member countries is available on https://www.newproducersgroup.online. Membership fluctuates with country engagement. At the time of conducting this research, membership included Montenegro and Albania, but not Senegal.

4 On the basis of Carnegie’s estimate for ‘light, well managed oil’, including an offsite emissions credit, 475 kg CO2 equivalent per barrel (Carnegie Endowment for International Peace). With high flaring, this could be 750 kg CO2e/barrel and thus 328.5 million tonnes of GHGs.

5 Climate TRACE emissions data for 2019; OPEC (2019) for production data; IEA (2021b) data for share of hydro in 2018. Emissions data for Angola and Guyana do not include forestry and land use.

6 Author calculations, Climate TRACE emissions data for 2020, EIA data for production in 2020.

7 By using energy from the power grid, emissions from the Norwegian Johan Sverdrup field were reduced by 80–90% compared to a standard development relying on gas turbines (Equinor, 2023).

8 The multiple-choice question included these options: Revenues for poverty reduction and investment in growth and prosperity; Revenues to service debt; Support for industrialization; Local content & employment; Better access to energy; Downstream industries; Other benefits.

9 These requirements include demonstrating a track record in the sector and a cumbersome accreditation process that can last longer than electoral cycles (Akintunde, 2021; Bhattacharya et al., 2020).

Additional information

Funding

This work is supported by the Norwegian Agency for Development Cooperation [Direktoratet for Utviklingssamarbeid] (grant number QZA 19/0109 awarded to the New Producers Group)