Why oil- and gas-rich countries need to change
Economies that rely too heavily on fossil fuels
Countries that depend too heavily on unsustainable gas and oil to power their economies are facing a double whammy of dwindling supplies and plummeting demand as renewables increasingly replace fossil fuels. Adding to their woes, many of these nations are located in parts of the world that are likely to become unliveable for months at a time due to climate change. As the proverbial begins to hit the fan, here are 10 gas and oil-rich countries looking forward to an uncertain future.
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Brunei
Brunei's oil and gas reserves are expected to run out by as early as 2035 according to the BP World Energy Outlook, which is seriously bad news for a country where oil and gas account for a whopping 90% of GDP. The southeast Asian kingdom currently enjoys one of the world's highest living standards with royal subjects benefiting from everything from zero income tax to free housing.
Brunei
In the coming decades the ruling royal family, which is headed by Sultan Hassanal Bolkiah, will find it increasingly challenging to keep the people in the style to which they have become accustomed. As unemployment rises and household incomes fall, the Sultan has responded by introducing a repressive penal code to stamp out rising dissent.
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Brunei
These repressive laws are putting off Western companies from investing in the nation with a slew of banks such as JP Morgan and Citibank recently ceasing operations, and the harsh penal code may undermine attempts to diversify the economy into sectors such as ecotourism as Western tourists stay away. Climate change also presents a major threat to the country, which is mostly low-lying and vulnerable to rising sea levels.
UAE
The United Arab Emirates (UAE) has the most diversified economy among the Gulf States. Dubai in particular has managed to successfully transition from oil and gas production into construction, real estate, tourism and financial services. However, over 20% of UAE's GDP remains reliant on oil to fuel economic growth.
UAE
In fact, a recent report from the International Energy Agency (IAE) entitled 'Outlook for Producer Economies' has identified the UAE as one of the countries most likely to face severe financial pressure in the coming decades as a result of its reliance on oil and gas. The country is working to cushion the impact however with diversification initiatives like UAE Vision 2021 and the National Innovation Strategy.
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UAE
Moreover, climate change is poised to hit the country hard. A 2015 study by the Massachusetts Institute of Technology (MIT) and corroborating research by other organisations have forecast that future temperatures in the Gulf as well as parts of southwest Asia and North Africa could surpass the threshold for human survival for months at a time due to a deadly combination of extreme heat and humidity.
Nigeria
Nigeria is another country that could find itself in deep trouble as a consequence of its heavy dependence on oil and gas. Oil is the nation's main source of income at the current time, providing 56% of state revenues and 85% of export revenues. Yet some analysts believe the country's supplies of oil and gas could run dry as soon as 2042.
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Nigeria
Unlike many other petro-states, Nigeria is plagued by poverty. In fact, a jaw-dropping 91.9 million people, almost half the population, now live in extreme poverty according to the World Poverty Clock, having to get by on less than $1.90 (£1.56) a day. Unemployment stands at a shocking 23.1%, up from 10.4% in 2016.
Nigeria
President Muhammadu Buhari has promised to take comprehensive steps to diversify Nigeria's economy touting a range of measures from auto manufacturing to tourism, but a multitude of barriers exist that will need to be tackled head-on, including the country's rampant corruption and poor infrastructure.
Qatar
Back in 2007 the Qatari government announced that the country would reduce its dependence on oil to zero by 2020, but despite efforts to diversify into sectors such as construction, real estate and tourism, the Gulf State continues to rely heavily on oil and gas, which remain the main drivers of its economy.
Qatar
Qatar has bountiful reserves of gas and its oil reserves aren't expected to run out until 2074 as stated in the CIA Factbook, but the country will have to rein in its energy use significantly in the coming decades. Like other petro-states in the region, it currently burns oil to produce electricity, a practice that is extremely inefficient and environmentally damaging.
Qatar
IEA executive director Fatih Birol has likened the practice to “using Chanel perfume to fuel your car”. The country will need to ramp up investment in renewables such as solar power to cut down on its energy use per capita, which is five times higher than Germany's at present. This will be far from easy as the region warms to hellish levels during summer and demand for air conditioning and desalinated water, which is already staggeringly high, skyrockets.
Libya
Libya is incredibly dependant on oil. The sector represents around 69% of export earnings according to the Organization of the Petroleum Exporting Countries (OPEC) and together with natural gas accounts for about 60% of the country's GDP, but this estimate is likely to be conservative.
Libya
In fact, the World Bank reports that Libya relies on oil for 98% of its exports and fiscal revenues. Efforts to diversify the economy into sectors including tourism have been few and far between and are compounded by the petro-state's poor security situation, which continues to be very precarious.
Libya
The country faces a plethora of challenges in the coming years, ranging from dwindling supplies of oil and gas to severe water shortages and the effects of climate change. Reflecting the situation in the Persian Gulf and parts of southwest Asia, areas of the country may become unliveable during the summer months as temperatures soar to stifling levels.
Angola
Staying in Africa, Angola is another country that has put all its eggs in one basket. The second largest oil producer in Africa, oil makes up around 89% of Angola's export earnings and contributes to around 50% of its GDP according to the OPEC's 2018 figures. Reserves are running dry however and the production of the black stuff is declining fast, battering the country's economy.
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Angola
Angolan President João Lourenço has made diversification of the economy the government's number one priority. His administration launched a six-year plan last year to reduce the country's dependency on oil and has set up initiatives to develop the fishing and agriculture sectors, and encourage direct foreign investment.
Angola
Whether these initiatives are effective in diversifying the nation's economy remain to be seen and some experts doubt the development of fishing and agriculture in Angola can revive the financial fortunes of a country in which poverty is on the rise and a large proportion of the population scrape by on less than $1.90 (£1.56) a day.
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Kuwait
Kuwait boasts the third-largest oil reserves on the planet but like the other nations in this round-up, supplies are expected to become exhausted sometime later this century. Right now, the Gulf State is super-reliant on oil exports. They account for 92% of export revenues and 40% of the country's GDP according to the OPEC.
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Kuwait
To reduce its over-reliance on oil, the country is pumping billions of dollars into New Kuwait Vision 2035, an ambitious strategic plan that will focus on transforming the petro-state into a global financial, commercial and cultural hub.
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Kuwait
It most definitely is in the country's best interests to reduce its dependency on environmentally damaging oil. In early June Kuwait registered the world's second-hottest temperature of 2019 with the mercury hitting 52.2°C (126°F), and the nation may become one of the first to experience prolonged periods of temperatures and humidity levels that exceed the threshold for human survival.
Venezuela
A country in chaos, Venezuela is facing a particularly bleak future. Despite sitting on the world's largest reserves of oil, the Latin American nation, which was once one of the richest in the region, has suffered years of economic mismanagement and corruption, which have decimated its once thriving economy and led to severe unrest.
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Venezuela
Instead of diversifying the economy when oil prices were high and capital was free-flowing, Venezuela's extreme left-wing government squandered billions on unsustainable welfare projects, which rather than helping the country's poor have ultimately plunged them into even greater depths of poverty.
Venezuela
The current government, which is headed by President Nicolás Maduro and supported by countries including China and Russia, has only made the country's situation worse, and Venezuela's financial fortunes are unlikely to change for the better until the incumbent regime is ousted in favour of a more centrist and less corrupt administration.
How Venezuela fell from riches to a country in crisis
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Iraq
Back to the Middle East, Iraq is exceptionally oil-dependent. The commodity represents the majority of the country's exports. The powers that be launched a five-year plan back in 2013 with the aim of diversifying the economy, but the rise of Islamic State and other security crises pretty much scuppered it.
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Iraq
Iraq's most recent five-year plan, which was launched last year, seeks to pick up where the previous one left off with various initiatives to rebuild infrastructure, create more than two million new jobs and diversify the economy away from oil. Yet the country's dependence on petroleum will remain unsustainably high for the foreseeable future.
Iraq
Plus, like other countries in the Gulf, Iraq is expected to be one of the first nations to feel the full effects of climate change. Cities such as Baghdad and Basra already experience excessively high temperatures during the summer months and these are only expected to rise further in the coming years, making the move away from oil an absolute must.
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Saudi Arabia
Likewise Saudi Arabia. The highest temperature on the planet so far this year was recorded in the Saudi city of Al Majma'ah in June with the mercury soaring to a scorching 55°C (131°F). This isn't far off the all-time hottest temperature registered on Earth of 56.7°C (134°F), which was recorded in the aptly named Death Valley, California in 1913.
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Saudi Arabia
The nation's government is attempting to rise to the challenge with its Saudi Vision 2030 plan, which was launched by Crown Prince Mohammad bin Salman in April 2016. Taking its cues from Dubai and other successfully diversified economies, the plan will develop infrastructure, health, education, recreation and tourism, and open up the country to increased direct foreign investment.
Saudi Arabia
This major effort to reduce the country's over-reliance on oil has on the one hand resulted in more liberal social policies, but increased repression on the other, culminating last October in the state-sponsored murder of dissident journalist Jamal Khashoggi. The assassination has led to a drop in direct foreign investment, which may threaten the crown prince's lofty diversification plans and stall the move away from oil, imperilling the nation's future.
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