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21. Tangled Web: The Role of Oil, Gas and Mining in Funding Regional Governments in Indonesia

Author:
David Manley, Rani Febrianti, and Hari Subhash
Publication Date:
03-2020
Content Type:
Special Report
Institution:
Natural Resource Governance Institute
Abstract:
Indonesia’s system of funding provincial, district and city governments is one of the most complex in the world, and has undergone substantial expansion over the last two decades. While the system allows thousands of authorities to function, it is failing in three respects: inequality of funding between regions persists, funding for some governments is unpredictable and volatile and some oil- and gas-rich regions have not sufficiently prepared for a possible future with much lower revenues. Indonesia’s planning ministry, Bappenas, should investigate these issues further focusing particularly on clarifying policy objectives, ensuring more reliable funding, supporting oil- and gas-rich regions in becoming more resilient to a long-term decline in prices and clarifying the published rules around the funding system.
Topic:
Civil Society, Government, Oil, Gas, Media, Mining, and Political Parties
Political Geography:
Indonesia and Southeast Asia

22. Coronavirus, Oil and Latin America: The Urgency of Economic Diversification and Energy Transition

Author:
Carlos Monge
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Key messages: Companies are demanding temporary bailouts, requesting that governments subsidize them with breakeven prices over sale prices, and allow them to postpone tax and royalty payments and agreed investments. Such actions may be necessary to preserve jobs and ensure domestic energy supplies. Governments are considering lowering social and environmental standards, fast tracking procedures and providing long-term subsidies to support ongoing projects and to attract new investments. For an industry already facing its twilight, these actions are not justified. Governments must urgently move ahead with economic diversification and energy transitions to ensure the availability of jobs, energy and fiscal incomes that the oil industry currently provides.
Topic:
Energy Policy, Oil, Diversification, Renewable Energy, Coronavirus, and COVID-19
Political Geography:
Colombia, South America, Central America, Mexico, and Peru

23. A Race to the Bottom and Back to the Top: Taxing Oil and Gas During and After the Pandemic

Author:
David Manley, David Mihalyi, and Colin Fleming
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
Earlier this year as people around the world responded to the coronavirus pandemic, their demand for oil tumbled. At the same time, OPEC and Russia initially failed to agree to coordinate supply cuts. Consequently, the price of a barrel of Brent crude oil fell from $60 in December 2019 to $20 in April 2020. As of this publication, the price is $43. If the price stays low, and if oil executives expect the price to remain low, companies may lobby governments to reduce taxes and other costly regulations. Payments to governments are often larger than costs for a company, so there is pressure on governments to reduce taxes to keep projects viable. This briefing considers the following key questions: Where will the oil price go next? What is the impact on currently operating projects, undeveloped projects, and those that are yet to be discovered? How should governments respond in changing oil and gas taxes? Will governments try to “race to the bottom,” but then lose a race back to the top? Key messages: There’s no certainty over future prices. Some rise is likely in the next few years, even if an energy transition results in a structural decline in the oil price in the longer-term. Governments must consider this uncertainty and probable rise when taxing oil and gas. Tax breaks on most currently operating projects are likely a waste of public money. Some governments may be pressured into reducing tax on projects awaiting development. But they must identify which projects would become viable with lower taxes, and which do not need a tax break. If in doubt, governments should consider whether a project that needs a tax incentive really will provide value for the country. For most countries, relative to total oil and gas produced, the production from projects that could be delayed or cancelled is small. But not so for the “new producer” countries like Senegal and Guyana. Changing taxes to make a country more attractive has the most impact before companies have invested – e.g., in attracting investment in licensing rounds. But setting low taxes now could force a government to raise taxes later if prices rise again. If a tax break is unavoidable, governments could use a “sunset clause” to limit the duration of the tax break. Ideally, governments should set progressive tax regimes that respond to changes in profit. But as many taxing authorities struggle to measure profit, governments could set simpler tax regimes based on sales revenue or prices – but must prepare to change tax rates in the future, and be prepared for the repercussion for a government’s credibility with investors. Governments should disclose contract terms detailing tax changes, tax exemptions, incentives and estimated break-even prices of projects to help government auditors, local think tanks, and the public check and support tax policy decisions.
Topic:
Oil, Natural Resources, Gas, Tax Systems, Commodities, Coronavirus, and Revenue Management
Political Geography:
Global Focus

24. Taking the EU out of the EastMed pipeline quagmire

Author:
Sofia López Piqueres
Publication Date:
09-2020
Content Type:
Policy Brief
Institution:
European Policy Centre
Abstract:
The recent escalating tensions between Greece and the Republic of Cyprus on the one hand and Turkey on the other have shown how contentious the issue of energy is in the Eastern Mediterranean. The planned EastMed pipeline is a case in point. But, paradoxically, adopting a ‘selective engagement’ approach and focusing on the energy and climate dimensions of the countries’ relations could be a starting point to rebuild trust. A discussion on the future of the EastMed project, in particular, could present an opportunity to get all parties at the table and diffuse the situation. To play a constructive role in this, the EU must act in the spirit of the Green Deal and stop investing in the EastMed pipeline, and find ways to encourage Greece, Cyprus and Turkey to make the shift to renewables now and ditch offshore gas exploration altogether.
Topic:
Energy Policy, Oil, Gas, Renewable Energy, and Pipeline
Political Geography:
Turkey, Greece, Cyprus, and Mediterranean

25. Rebalancing Oil Supply and Demand

Author:
East View Information Services
Publication Date:
01-2020
Content Type:
Journal Article
Journal:
International Affairs: A Russian Journal of World Politics, Diplomacy and International Relations
Institution:
East View Information Services
Abstract:
Interview with Yur Shafranik, Chairman of the Board of Directors, International Group of Companies SoyuzNefteGaz
Topic:
Energy Policy, Oil, Natural Resources, and Supply Chains
Political Geography:
Global Focus

26. Understanding the Saudi Aramco IPO

Author:
Simon Henderson
Publication Date:
11-2019
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
economically transform the kingdom. On November 3, Saudi Arabia formally announced plans for the partial selloff of its state-owned oil company, to begin sometime next month. The successor of the Arabian American Oil Company, originally established by U.S. firms, Saudi Aramco is easily described in superlatives. It is the largest oil producer in the world, with the lowest production costs, and has a reputation for being extremely well run, all of which have helped it become the most profitable company on the planet. Yet being situated in the Middle East, having key installations vulnerable to Iranian attack, and selling oil to countries increasingly concerned about climate change are hardly factors conducive to favorable long-term prospects. The kingdom simultaneously claims to be diversifying away from its dependence on oil, adding to the uncertainty about its approach.
Topic:
Foreign Policy, Oil, and Business
Political Geography:
Middle East, Saudi Arabia, and United States of America

27. Iran’s New Budget Is Tight, But Not Tight Enough

Author:
Patrick Clawson
Publication Date:
12-2019
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Rouhani has taken a remarkably austere fiscal approach ahead of the looming parliamentary election, but the country’s economic situation is still not sustainable over the long run. On December 8, following established procedures, President Hassan Rouhani visited parliament to present his budget for the Iranian year 2020/21, which begins in March. Notwithstanding the government’s rosy rhetoric, his spending proposals show the tough times the Islamic Republic is facing.
Topic:
Foreign Policy, Oil, Sanctions, Budget, Elections, and Economy
Political Geography:
Iran and Middle East

28. The Global Exchange (Fall 2019)

Author:
Christy Clark, Monica Gattinger, Wilfrid Greaves, P. Whitney Lackenbauer, Geoffrey Cann, Matthew Foss, Kelly Ogle, Jean-Sebastien Rioux, Wenran Jiang, Robert Seeley, Dennis McConaghy, and Ron Wallace
Publication Date:
09-2019
Content Type:
Journal Article
Journal:
The Global Exchange
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
The demand for Liquefied Natural Gas (LNG) continues to grow and Canada’s unconventional reserves remain amongst the very best in the world. With political will and an appetite to embrace gas the way Premier Lougheed once championed oil, we can still put the wealth of Western Canadian gas to work for the good of all Canadians. The papers that follow will be essential pieces for policy makers as they map out the path to Canada’s next great economic transformation.
Topic:
Foreign Policy, Climate Change, Energy Policy, Environment, Oil, Gas, Risk, and Trade
Political Geography:
China, Canada, Australia, and North America

29. The Global Exchange (Spring 2019)

Author:
Adam Frost, Colin Robertson, Randolph Mank, Robert Hage, Claudia Marín Suárez, David J. Bercuson, Julian Lindley-French, and David Perry
Publication Date:
03-2019
Content Type:
Journal Article
Journal:
The Global Exchange
Institution:
Canadian Global Affairs Institute (CGAI)
Abstract:
The international arena is as dynamic as ever. The rate of technological development continues to accelerate beyond the pace society is capable of adapting to it. Climate change indicators are approaching and surpassing key thresholds, fragile and failed states are proliferating, and great power competition has returned. Given the magnitude of these challenges, the cultivation of friends, partners and allies is paramount to furthering Canada’s national interests beyond its borders. The lead package of this issue examines some of the global challenges facing Canadian policy-makers and offers recommendations for how best to navigate this unruly world. Colin Robertson outlines today’s messy international arena and emphasizes the importance of Canada’s active engagement. He explains why Canadian leadership must carefully manage the Canada-U.S. relationship and the necessity of supporting multilateral co-operation to stand up against disruptive revisionist powers. He also says Canada should enthusiastically support the implementation of recent trade agreements and address the causes of social upheaval in the Western world. Considering the release of the Trudeau government’s extensive defence policy review, Randolph Mank questions why a similarly extensive foreign policy review was not first conducted. He argues that Canadian foreign policy is misaligned with Canada’s national interests, and therefore, a comprehensive strategic realignment is warranted. Canada’s interests are not best served by ad hoc prescriptions. Robert Hage turns to Canada’s energy policies. He criticizes Bill C-48 for limiting transportation options for Canada’s most valuable hydrocarbon resources. He argues that building infrastructure to the West Coast to facilitate the export of Canada’s oil and gas resources should be handled as a nationbuilding project, vital to Canada’s economic well-being. Francisco Suárez Dávila’s article provides an overview of President Andrés Manuel López Obrador’s first 100 days in office. Mexico’s new leader is a key figure for Canadian policymakers to understand as they manage the trilateral North American relationship, and work to ratify and implement CUSMA. David Bercuson, Julian Lindley-French and David Perry turn to Canada’s defence and security. Bercuson argues NATO is alive, well, and not going anywhere soon, as the Russian threat to Europe remains ever-present. Lindley-French outlines the tactics of Russia’s coercion, the extensive modernization of its military forces and the ambitions that threaten its European neighbours. Finally, Perry returns to Canada’s Strong, Secure, Engaged defence policy two years after its release to provide an assessment of how closely the Trudeau government has followed its spending targets. The 21st century has the potential to be the most violent and chaotic century in human history – or the most prosperous, providing more people with a higher quality of life than any previous era. If Canada’s policy-makers are to successfully manage the challenges of this unruly, messy world, they will have to vigilantly align Canada’s means with its desired ends, including working with other states, like-minded or otherwise, to advance common interests.
Topic:
International Relations, Foreign Policy, NATO, Climate Change, Oil, and Trade
Political Geography:
Russia, Canada, North America, and Mexico

30. Turmoil in South America and the Impact on Energy Markets

Author:
Lisa Viscidi
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
2019 has been marked by widespread uprisings throughout Latin America. In the last few months, protests have erupted in Bolivia, Ecuador, and Colombia, while Argentina elected a new leader, Bolivia’s president resigned following growing tensions with his political opponents and the military, and Peru’s leader is facing a political crisis. Largely fuelled by anger over graft, economic disparity, and the rising cost of living, the resulting social unrest has led to uncertainty over the energy sector outlook. Continued political and social turbulence will likely contribute to stagnant oil and gas production growth in these countries. Conversely, Brazil and Guyana are on track to become the region’s largest oil producers. In Brazil, pre-salt reserves have been attracting foreign investment, although further market-friendly reforms will need to be made to sustain development. Guyana, for its part, is in line to become the region’s newest petrostate and will see explosive economic growth in the coming years. Despite its large reserves, Venezuela is excluded from this study because the country’s political and economic turmoil, coupled with US sanctions, make any increase in investment highly unlikely in the short term. Paper prepared in the framework of the IAI-Eni Strategic Partnership, December 2019.
Topic:
Climate Change, Energy Policy, Oil, Natural Resources, Gas, and Domestic politics
Political Geography:
South America and Latin America