Late to the Party: The Challenge of Discovering Oil in the 21st Century

• In Event: National Oil Companies and Climate Politics

Abstract

Ethiopia, Ghana, Guyana, Sierra Leone, and other developing nations are grappling with finding oil and gas when the world is moving away from fossil fuels. Unlike major producers — like Saudi Arabia, which has the power to influence global oil prices, or the United Arab Emirates and Azerbaijan, which set the pace of a fossil fuel phase-down by hosting COP28 and COP29 in 2023 and 2024, respectively —, these new producers lack any influence in steering the transition to renewable energy. How can a small, undiversified economy transition away from non-renewable natural resources while using these same resources to reduce poverty and promote economic development?

To answer this question, this study unfolds in three parts. First, it examines seven nations that discovered fossil fuels in the 21st century — Ghana (2007), Mozambique (2009), Sierra Leone (2009), Ethiopia (2010), Tanzania (2010), Senegal (2014), and Guyana (2015) —, with a case study of the latter. Despite producing less than 1% of the world's oil, Guyana's economy has tripled since production began in December 2019, and its 800,000 citizens (half of whom live in poverty) have high expectations for what their country's newfound wealth can accomplish. Second, this study moves to nations that discovered fossil fuels in the past, focusing on Trinidad and Tobago and Venezuela as experienced producers with different outcomes: one using oil for prosperity, the other facing authoritarianism and poverty despite vast reserves. What can we learn from their experiences? The study concludes with theoretically grounded policy recommendations that strike a balance between the immediate development needs of new producers and their governments' responsibility to create a sustainable and equitable future. This project addresses the unique challenges faced by latecomers to the oil game and provides valuable lessons for a world transitioning towards cleaner energy alternatives.

Author

• Iasmin Goes, Colorado State University