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Resource Depletion, Dependence and Development

The Resource Depletion, Dependence and Development project examines economic sustainability in countries whose revenue and foreign exchange earnings are dependent on the export of hydrocarbons. Its aim is to further debate about economic sustainability in 12 such countries (listed below) through research, simulations and discussions with industry and government decision-makers.

Our research takes as its starting point the choice that oil and gas producing governments face over rates of depletion. Present high oil prices give some the freedom to consider whether it is in their long-term interests to expand production in the near future. Expansion is likely to increase their dependence on oil exports and hasten the time of declining production. Increased dependence may hinder efforts to diversify economies while excess foreign exchange merely accumulates financial assets, not necessarily creating jobs or stimulating the non-oil sector.

Choices relating to depletion rates, domestic energy policy and economic diversification that are made now will have wide-ranging national and global impacts yet there has been little opportunity for debate amongst oil-exporting policy makers on the subject. Given the likely balance of supply capacity and demand over the next few years, a slower rate of depletion by a number of countries would not reduce their revenues as much as would have been the case in times of global surplus capacity. A better understanding of the exporters' development options, risks and concerns is needed.

Progress

Initially, we drafted a paper entitled Resource Depletion, Dependence and Development: Can Theory Help?, which reviews existing literature on depletion policy and the 'resource curse'. Case studies were compiled on each of these 12 countries:

  • Algeria
  • Angola
  • Azerbaijan
  • Indonesia
  • Iran
  • Kazakhstan
  • Kuwait
  • Malaysia
  • Nigeria
  • Norway
  • Saudi Arabia
  • Timor Leste

These case studies present simulated scenarios considering how long the hydrocarbon sector can continue to support the rest of the economy under various assumptions. Country experts were then asked to add their analysis, using their knowledge of the country's current economic and energy policies and the political and governance capabilities for adjustment.

A senior-level workshop with policy-makers and planners from government, banking and industry took place in London on 17-18 April 2008. Discussions clarified how depletion, dependence and development issues are perceived by the countries concerned.

The report 'Ending Dependence: Hard Choices for Oil-Exporting States' is based on the conclusions of our research and workshop insights. This highlights the factors affecting decisions to expand production in the medium to long-term and examines the options available to exporters in tackling the sustainability question. Further details on the model and assumptions used in the analysis >>

Draft Publications

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Project Sponsors

This project is being funded by the Asian Development Bank, the Norwegian Ministry of Petroleum and Energy and BP.

Contacts

For more information and a full project proposal, please contact the project organizers:

Project Leaders
  • Professor Paul Stevens, Senior Research Fellow (Energy), Energy, Environment and Development Programme, Chatham House
  • John V Mitchell, Associate Fellow (Energy), Energy, Environment and Development Programme, Chatham House
Project Coordinator
  • Glada Lahn, Research Fellow, Energy, Environment and Development Programme, Chatham House