Middle East OPEC Countries Rated 'High Risk' in Long-term Energy Security Study
The long-term energy security of the oil-rich Organisation of the Petroleum Exporting Countries (OPEC) nations has been brought into question by a new study, which classifies the eight Middle East members of the organisation as ‘high risk’ countries.
The Energy Security Risk Index, released by Maplecroft, a firm specialising in corporate risk intelligence, has been developed to pinpoint risks to supply chains, operations and investments in 212 countries. The index is split into short-term and long-term assessments of energy security and has been designed to enable businesses and investors to isolate current and future risks.
Due to a lack of hydrocarbon resources and reserves and little, if any, diversification away from fossil fuel dependency, it is the small island nations that are most at risk in the long-term Energy Security Risk Index. Of the 39 countries rated ‘extreme risk’, 33 are small island nations, with Singapore, Nauru, American Samoa, Guam and Netherlands Antilles considered most vulnerable. However, the Middle East members of OPEC – United Arab Emirates (UAE), Qatar, Saudi Arabia, Kuwait, Libya, Iraq, Algeria and Iran – have all been classified as ‘high risk’ nations.
According to Maplecroft analyst Dr Anna Moss: “A sustained growth in demand for energy has led to serious concerns over the long-term availability of reliable and affordable oil and gas supplies. While the Middle East OPEC countries have large reserves, without a long-term investment in alternative energy sources, a move away from total dependency on fossil fuels and a reduction in consumption rates, they are subject to long-term risks.”
The other members of OPEC – Angola, Ecuador, Nigeria and Venezuela – have been rated ‘medium risk’ due to a greater diversity in energy sources and less intensity of fossil fuels within the economy.
In contrast, the OPEC nations dominate the low risk category of the short-term Energy Security Risk Index, which measures the amount, diversity and dependency on fossil fuel imports, plus electricity imports, and the security of imports in relation to the vulnerability to conflict, regime stability and the business environment of the source country. All OPEC members are net exporters of energy and do not currently depend on imports.
Nine countries are rated by Maplecroft as ‘extreme risk’ for short-term vulnerability to energy security risks including: Belarus, Italy, Rwanda, Cambodia, Moldova, Sierra Leone, Lithuania, Sao Tome and Principe and Jordan. The US, India, Japan, Germany, France and Spain are all considered high risk, while the UK is ranked 126 and rated medium risk.
Belarus and Italy are particularly susceptible to energy insecurity in the short term. Italy imports 85% of its energy from sources considered unreliable, including Libya 27%, Russia 11%, Iraq 7% and Iran 7%, while Belarus imports 93% of its energy and is almost completely reliant on Russia, which has a history of cutting of energy supplies to neighbouring countries.