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7 December 2022

Not Zero: Meet the world’s aspiring new oil nations

Rainforest states and other green parts of the world are seeking to fund development with fossil fuels, but is it really worth it?

By Nick Ferris

Of the 198 countries that meet each year at UN summits to discuss the climate crisis, there are a handful that can afford to be a little more complacent than the rest. That’s because a few heavily forested nations – such as Bhutan in the Himalayas, or Gabon in the Congo rainforest – are already net carbon sinks, with more carbon absorbed each year by the landscape than is emitted by humans. But at least two members of this elite group of countries – Suriname (93 per cent rainforest cover) and Guyana (85 per cent rainforest cover) – are at risk of undermining their status through their ambitions to become oil nations. 

Guyana’s 11 billion barrels of oil give it the highest per capita reserves in the world. An oil boom in 2020 led to growth of 43.5 per cent, even as the rest of the world languished in a recession. Suriname hopes to follow in its neighbour’s footsteps with its own estimated 6 billion barrels: the country has begun the process of auctioning extraction areas to Western oil companies. 

“We need to expand our fossil fuels so that we can develop”

The problem from a climate perspective is that the world already has more than enough oil and gas. The International Energy Agency (IEA)’s net zero 2050 pathway makes clear that no new fields are needed if the world is to meet its target of limiting warming to 1.5°C above pre-industrial levels.

Yet low or middle-income countries such as Guyana and Suriname have significant development needs, and have done almost nothing to harm the planet. There are growing calls for developing nations to be allowed to extract some fossil fuels to fund their development. In August 2022 the African Union (AU) called on the continent to “continue to deploy all forms of its abundant energy resources including renewable and non-renewable energy to address energy demand”. 

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“There’s a growing sense of frustration at the hypocrisy of the West when they argue countries should not be developing oil assets”

In Kenya, another developing nation, oil was first discovered in 2012; it is being analysed for commercial viability. “We have a huge youth population,” argued Andrew Kamau, principal secretary at Kenya’s Ministry of Petroleum, at a debate hosted by the New York Times at Cop27. “We need to expand our fossil fuels so that we can develop.”

Kenya, Suriname and Guyana are among more than 25 countries that are members of the New Producers Group, a forum convened by the British think tank Chatham House whose purpose is to help countries “manage petroleum resources in the most effective way and forge new development paths that create prosperity in the energy transition”. “We don’t tell countries what they should do,” said the group’s director Valérie Marcel, from Chatham House. “We expose them to experts from a range of views. And they trust us for that approach.”

Members of the group also include Barbados, which granted new hydrocarbon exploration licences to the oil giant BHP in 2020. Mia Mottley, the country's prime minister and a well-known climate champion, defended the country’s strategy at an event hosted by the Financial Times ahead of Cop27, arguing that developing countries need “a way to finance our route to net zero”.

“There’s a growing sense of frustration at the hypocrisy of the West when they argue countries should not be developing oil assets,” said Marcel.

[See also: When finance and oil collide]

However, any expectations of a bonanza need to be tempered. Marcel suggested that any country, such as Barbados, still in the “exploration phase” is unlikely to ever emerge as a new oil producer, and they should instead focus on “growth sectors that make sense in the energy transition”.

Moreover, if the energy transition accelerates sufficiently to meet net zero ambitions, then many countries’ oil plans are likely to under-deliver. Six emerging oil nations analysed by the Carbon Tracker Initiative think tank would see a shortfall in revenue, with Mauritania and Uganda not making any money at all.

[See also: Labour’s target of net zero by 2030 is impossible without planning reform]

There are other risks attached to new oil and gas. Mozambique expected a boom after Africa’s second-largest gas reserves were discovered off its coast in 2010. But 12 years later an insurgency in the country’s north, around the gas fields, means projected revenues have not been realised. The International Monetary Fund highlights how, in part to help pay for new gas developments, Mozambique’s debt shot up to 113 per cent of GDP by 2019.

These risks mean many civil society groups in the Global South remain opposed to oil and gas development. “Natural resources have historically been more of a curse than a blessing,” said Boaventura Monjane, from the South Africa-based Alternative Information and Development Centre. “This is not speculation. We have seen it happen in countries like Nigeria and Mozambique, where resources have shown little to no benefit to the local population.”

Renewable energy is a better bet in most markets, argued Ubrei-Joe Maimoni Mariere, from the Nigeria-based Friends of the Earth Africa. “Africa needs an approximate annual investment of $130bn to dismantle existing dirty energy systems to leapfrog to 100 per cent renewable energy for all by 2050.”

For this to happen, however, developing countries will need access to more financing: something most wealthy countries have so far failed to provide in sufficient quantities.

[See also: Net zero strategy: industry is key]

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