Several oil producing countries or petrostates have sought to restructure their economies since the 1970s. But the task has now become more urgent. Revenues from oil and natural gas have plunged in recent years, as prices have fallen.

A new report from the International Energy Agency (IEA) puts the challenge in stark relief. In six large petrostates the IEA examined—Iraq, Nigeria, Russia, Saudi Arabia, the United Arab Emirates and Venezuela—net income from oil and natural gas in 2016 was less than one-third of its level in 2012.

Fatih Birol, director of the IEA, predicts that countries’ efforts will gain more urgency for two reasons: shale which has reduced the power of OPEC and second a change in demand due to concerns about climate change.

Oil prices will become more volatile, making it harder for countries to achieve steady economic growth Birol predicts. Nevertheless, progress may be slow. Plans for reform were hatched when oil prices were low. Now they have ticked up and revenues are rising again. There is a danger that some petrostates rest on their oil riches, as they have many times before.

Source: The Economist