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Study: Iraq and the oil-producing countries will lose $13 trillion until 2040

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Study: Iraq and the oil-producing countries will lose $13 trillion until 2040


19:09 - 13/02/2021
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A report issued by the Carbon Tracker Research Center said that the transition to green energy could cost oil countries $13 trillion by 2040.

According to the "BBC", the report emphasized that oil and gas producing countries may face a gap of billions of dollars in their government revenues, indicating that some countries may lose at least 40% of total government revenues.

It is noteworthy that "Carbon Tracker" is a non-profit research institution, based in London, which researches the impact of climate change on financial markets.

The report estimates the total cumulative revenue loss of all oil-producing countries by 2040 at about $13 trillion, explaining that "efforts to contain the rise in global temperatures are pushing to remove carbon from energy supplies."

Carbon Tracker described its report as a "wake-up call for oil-producing countries and international policymakers," noting that they "planned on the basis that oil demand would rise until 2040."

But "Carbon Tracker" warns that demand must be reduced to meet climate goals, and that oil prices will be lower than what oil producers and industry currently expect, indicating what will happen to government revenues if the increase in global temperature is limited to 1.65 degrees Celsius.

The report compares the $13 trillion in lost revenue to what it calls "business as usual" projections of continued growth, and it includes countries whose economies are not dominated by oil - such as the United Kingdom, the United States, India and China.

However, the report believes that the main focus is a group for which the loss of oil income will be more difficult, which is about 40 countries it calls "oil states", stressing that

the expected damage to government finances in these countries is stark. With an average loss of 46% of oil and gas revenues.

He explained that the dependence on oil and gas revenues is very noticeable for some countries, as it represents more than 80%, for example, for countries such as Iraq and Equatorial Guinea, and for seven other countries, including Saudi Arabia, the number is more than 60%.

Regarding the losses, the report said that some countries will face very large losses in total revenues, represented by “Angola and Azerbaijan”, where the expected loss is at least 40%.

He emphasized that 12 other countries, including Saudi Arabia, Nigeria and Algeria, the loss is in the range of 20% to 40%.

For some indicators in the Middle East and North Africa, the report finds that the impact is rather moderate. He declared that "the low production costs will give them a prominent role in global oil and gas supplies."

The report referred to what it called "emerging oil states", where according to the report they must "face the potential loss of revenues from the oil fields, as development is planned in the coming years.".

The report says that diversifying government revenues and national economies is an urgent task, stressing that this will need to be adapted according to the needs of each country separately, but there are some steps that indicate that it will be of widespread benefit.

This includes investing in education, improving government quality and the business climate, and uninvested capital in oil and gas can alternatively be used to invest in industries that are more resilient to the energy transition.
Ended / 25 h

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