Countries depending on oil can brace for lower revenue - EITI report

Countries depending on oil can brace for lower revenue – EITI report

Jun 27, 2022 News

Kaieteur News – As countries around the world speed up the transition to renewable energy, the Extractive Industries Transparency Initiative (EITI), a global watchdog for the governance of oil and gas and mineral resources, in its 2022 Progress Report has highlighted that oil producing nations that depend on revenue garnered from the sector can brace for a decline from that stream.
Guyana, being a fairly new kid on the block when it comes to the production of oil has been pushing to speed up production rates, with the backing from United States oil giant, ExxonMobil. But while the country has been racing down that path, nations around the world have turned in another direction; moving swiftly to renewable energy options to generate electricity and even power vehicles.
The Extractive Industries Progress Report notes, “The global energy transition will transform the extractive industries, exposing producer countries to new risks and opportunities. As global consumption of fossil fuels declines, countries that rely on revenues from petroleum and coal will have to contend with a decline in revenue from those sectors.”
Further, it also highlights that the rates of production have declined in some nations. Over two years, Guyana received US$638 million in oil profits and an additional US$81 million in royalty payments. Last month, the country made its first withdrawal from the Natural Resource Fund (NRF) – some US$200 million, equivalent to $41.7 billion in local currency. During the Budget 2022 process, Parliamentary approval was granted for the sum of US$607.6 million to be transferred during the fiscal year 2022.
The speedy transition to renewable energy is largely owed to the Russian invasion of Ukraine. Due to the ongoing war between the two European states, countries have imposed sanctions on Russia, blocking the export of the country’s resources. Russia has also blocked Ukrainian ports, hampering exports and imports.
In addition, the United Nations (UN) have also put countries on guard that as climate change advances, global emissions must be reduced.
In fact, the UN Secretary General, Antonio Guterres, during COP26 last October warned that the pledges made thus far by countries are ‘far from enough’. Speaking to the closing of the 26th United Nations Framework Convention on Climate Change (UNFCCC), sponsored Conference of Parties (COP26), Guterres noted that “The climate action struggle requires all hands on deck. It is everyone’s responsibility.”
According to Guterres, “We cannot settle for the lowest common denominator; we know what must be done. Keeping the 1.5 goal within reach means reducing emissions globally by 45 percent by 2030.”
More than 1,000 cities around the world have committed to reaching net zero by 2050 or earlier — sometimes far earlier.

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