Editorial - Aug/Sept 2016
As this edition of Global Insight went to press, the IBA was preparing for its Annual Conference in Washington. There’ll be a remarkable array of world-renowned speakers and experts in their respective areas, including former US Secretary of State Colin Powell, current US Attorney General Loretta Lynch, and US Trade Representative Michael Froman amongst many others. The keynote speaker at the opening ceremony will be Christine Lagarde, Managing Director of the International Monetary Fund.
Lagarde is described by some as a ‘global financial firefighter’: issues from the state of the eurozone to difficulties in emerging markets land squarely on her desk. Asked recently what keeps her awake at night, her response was that she worries about low-income oil producers like Nigeria. ‘That’s a country that is facing, like many other oil-producing countries, a real hardship and a necessity to very promptly redesign its business model and realign its interests with a completely new reality which is here for longer than many think.’
The dramatic and widespread impact of prolonged low oil prices is the subject of our cover feature (‘Crude awakening’). The impact has indeed been felt far and wide, and particularly by countries like Nigeria and Azerbaijan – which, as a result, are likely to seek multi-billion dollar loans from various international organisations, such as the World Bank and African Development Bank – as well as Venezuela, which last year struck a deal with China to supply oil in exchange for aid.
The consequences of low oil prices are being felt not only by low-income countries, of course, but also by the major oil companies. They’re being squeezed from all sides, most notably by renewables on one side and, on the other, smaller, more agile companies that have been throwing themselves into the shale oil and gas industry. There is no doubt that change is being forced upon both oil-producing countries and companies, but the hope amongst more forward-thinking analysts is that a leaner, more efficient, and environmentally friendly model for energy production, one fit for the twenty-first century, will emerge – sooner rather than later.