The impact of the coronavirus has deeply unsettled the governments of emerging oil and gas producer countries. The health crisis upset individual lives across the globe, and disrupted government agencies’ capacity and planning. Oil companies have suffered badly and several major projects have been brought to a standstill. Lockdowns worldwide significantly restrained demand for oil at a time of historic oversupply in the market, which resulted in prices plummeting in April 2020. While oil prices have since made a partial recovery, the sector remains shaken. Questions abound about the long-term effects of COVID-19 on the world economy and energy demand. It remains to be seen how long national economies will take to recover and the extent of the impact.
The wide-ranging impact of the pandemic means governments must work to understand the new normal and adapt to it.
The economic slowdown has caused dramatic shifts in consumer behaviour, specifically in relation to the use of transport. While there is still no consensus on whether the resulting fall in oil demand is permanent (versus deferred to when economic growth returns), signs are increasingly showing that demand has peaked. There may well be another price cycle in future, but the current slump in the oil industry could be a dress rehearsal for the structural decline to come. This signals an uncertain future for the oil and gas sector of emerging producer countries and raises valid questions about the risks and rewards of the traditional resource development model.
When public life began to shut down across the world, the New Producers Group undertook a series of virtual discussions with the governments of its 30 member countries. These discussions focused on fostering resilience at the individual, organizational and national levels and each brought together between 50–110 government officials from member and non-member countries (and in several cases included representatives of non-governmental organizations and industry). The remote format of these meetings meant that participants incurred no costs to attend, which enabled the more resource-constrained agencies, such as environmental protection agencies and sub-national governments, to participate to a higher degree than ever before. The officials actively involved in the group doubled during the series of meetings to 600 people. With environmental, planning, energy and finance agencies well represented, the meetings were good opportunities for cross-government debate and capacity-building on the strategic issues facing the petroleum sector.
