This report focuses on the 40 countries with the greatest fiscal dependence on oil and gas revenues – the petrostates. These are the most oil and gas-reliant countries (as a percent of GDP) and are predominantly in the Middle East, North and West Africa, and South America.
There is a fundamental shift underway as the global economy begins to decarbonise. Populations that are heavily reliant on fossil-fuel production face lower government revenues and job losses as the pace and inevitability of the energy transition increases. 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.
Given that these countries’ fiscal budgets presently rely heavily on fossil fuel revenues, the analysis focuses on quantifying the potential shortfall under a low-carbon scenario versus revenue levels over the past decade. The populations of economies that are heavily reliant on fossil-fuel production are perhaps the most obvious example where the transition will also have some negatives, for example, lower government revenues and job losses.