London: Oil producing countries need to fix the rest of their economies to prepare for inevitable falls in exports, a report by a British think tank has said.
The survey of the economic prospects of 12 oil-producing countries by Britain’s Royal Institute for International Affairs – entitled “Ending Dependence, Hard Choices for Oil-Exporting States” – described its own conclusions as “rather depressing”.
Only three of the 12 countries – Indonesia, Malaysia and Norway – were “well on the road to moving towards a non-hydrocarbon-dependent economy.”
The others – Algeria, Nigeria, Angola, Azerbaijan, Kazakhstan, Timor Leste (East Timor), Saudi Arabia, Kuwait and Iran – “face serious barriers and constraints.
“These revolve around weak governance, poorly performing private sectors and an inadequate programme of economic and political reform.”
Plateau
Although many of them will be able to sell oil for decades, they face a plateau period long before oil runs out, when the rate of production stops increasing while growing domestic demand means exports slow and revenues shrink. “Time, not oil, is running out,” it said.
Algeria and Nigeria in particular were singled out as facing the prospects of a “painful and imminent transition, because previous efforts to diversify over a long history of hydro-carbon dominance have failed.”
