External Publications
2019.27
Date: 3/8/2019

The impact of the global energy transition on MENA oil and gas producers


Authors:
Simone Tagliapietra (Bruegel, Fondazione Eni Enrico Mattei, The Johns Hopkins University SAIS Europe)
Type: Journal
Published in: Energy Strategy Reviews, Volume 26, November 2019, 100397
Keywords: Energy transition, Geopolitics, Middle East, North Africa, Rentier state

Abstract

Endowed with half of the world's known oil and gas reserves, the Middle East and North Africa (MENA) region is cornerstone of the global energy architecture. The global low-carbon energy transition poses critical questions to MENA oil and gas producers, as it may imply sustained pressure on their development models, which rely heavily on hydrocarbon revenues. Without economic reforms, this may translate into macroeconomic unbalances, and ultimately put at risk established social contracts in the region. The sharp drop in oil prices that began in 2014 fostered MENA hydrocarbon producers to launch ambitious economic reform programmes aimed at increasing the diversification of their economies, notably by developing their non-hydrocarbon sectors. This article argues that – together with the pressing need to create jobs opportunities for a large and youthful population – the possibility of the world moving more aggressively towards a low-carbon future should represent a key argument for the implementation of these economic reform programmes. That is, MENA producers might use the potential prospect of lower global hydrocarbon demand and prices to overcome their rentier state model, and pursue the economic diversification plans never duly implemented in the past.

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The impact of the global energy transition on MENA oil and gas producers

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