Nationwide Oil Corporations Should Lead World Shift Away from Fossil Fuels, Says NRGI Professional — World Points
ANTALYA, Türkiye, November 14 (IPS) – The shift away from fossil fuels is made harder by the highly effective, usually missed position of nationwide oil corporations. These corporations are deeply embedded of their international locations’ economies and political methods.
In the course of the COP31 local weather summit in Antalya, Inter Press Service (IPS) spoke solely with Amir Shafaie, Authorized and Financial Program Director on the Pure Useful resource Governance Institute (NRGI), concerning the position of state-owned oil corporations within the vitality transition, the monetary dangers of continued fossil gasoline investments and the insurance policies governments must undertake to fulfill international local weather targets.
Shafaie mentioned nationwide oil corporations produced 54 % of the world’s oil and half of its gasoline in 2025. Their share of world manufacturing might rise to round 62 % by 2050 if present traits proceed.
Excerpts from the interview:
IPS: Nationwide oil corporations account for practically half of world fossil gasoline manufacturing. How vital is their position within the international transition away from fossil fuels, and why have they acquired much less consideration in local weather negotiations?
Shafaie: Nationwide oil corporations are much more vital than the query suggests. In 2025 they produced 54% of the world’s oil and half its gasoline, and their share is projected to achieve round 62% by 2050. Final yr (2025) NOC capital expenditure was round US$240 billion — greater than 3 times what the oil majors spent. So, the tempo of the transition away from fossil fuels will probably be considerably formed by these state-owned corporations.
NOCs are additionally politically delicate. They usually have a large position within the nationwide political financial system and vital affect over authorities: they fund nationwide budgets and public companies and are sometimes certain up with nationwide id.
Given their significance, it’s time to cease treating them as a footnote in transition conversations.
They need to be a headline.
IPS: What particular steps ought to nationwide oil corporations take to align their enterprise methods with the worldwide aim of limiting temperature rise to 1.5°C?
Shafaie: There isn’t any single mannequin — NOCs differ extensively in mandate and functionality — however each NOC wants a deliberate technique of transformation to navigate the vitality transition, and authorities house owners of NOCs want to make sure that is the case.
As a primary step, NOCs should cease treating enterprise as ordinary as a impartial choice and begin to significantly assess the dangers – and alternatives – introduced by the worldwide vitality transition. Each NOC ought to check its deliberate investments in opposition to numerous demand eventualities, together with these by which international locations meet their local weather pledges and oil and gasoline demand falls — and publish the outcomes. Many initiatives that NOCs view positively immediately could not pay again. In 2023, NRGI evaluation discovered that NOCs plan about US$1.8 trillion of upstream spending over the 2023-2032 interval and that roughly 1 / 4, about US$425 billion, of that public cash can be misplaced if oil demand falls in step with governments’ local weather pledges.
Furthermore, in these assessments, NOCs shouldn’t assume a pivot to gasoline eliminates threat: demand destruction from the latest disaster, with international locations switching to renewables that may be cheaper and fewer geopolitically risky, works in opposition to that; and there’s nonetheless quite a lot of gasoline and LNG coming on to the market in coming years, so initiatives will have to be aggressive.
Governments and NOCs additionally want a reputable plan for the brand new enterprise areas NOCs pursue, figuring out sectors and applied sciences by which the NOC holds real comparative benefits.
Lastly, NOCs should not solely business entities—in lots of producing areas they’re anchor employers and repair suppliers, and their transformation carries actual penalties for staff and communities. Governments and NOCs should anticipate the simply transition wants of various areas as NOCs remodel.”
IPS: How can governments persuade state-owned oil corporations to scale back fossil gasoline manufacturing whereas balancing vitality safety, financial development and employment issues?
Shafaie: Balancing these numerous issues just isn’t straightforward, however governments must weigh all of the components (vitality safety, financial development, employment issues and manufacturing plans), not concentrate on only one or a few of them. Governments are additionally properly positioned to do that with NOCS.
They personal these corporations or maintain giant stakes in them, so that is much less about persuading NOCs than about setting a transparent coverage, together with round how a lot income can return into new oil and gasoline and requiring investments to be examined in opposition to completely different demand eventualities.
And there’s room to steadiness these components. The latest vitality disaster exhibits that vitality safety and vitality transition should not opposites: oil dependence is itself a safety and cost-of-living threat, and NOCs usually find yourself absorbing the associated fee, as Pertamina has with subsidised gasoline costs.
The problem additionally appears to be like completely different for NOCs in net-importing and net-exporting international locations. In internet importers similar to Thailand, producing extra at house presents little safety from world costs, so the vitality safety beneficial properties come from reducing demand and diversifying provide. In giant internet exporters such because the UAE or Norway, the primary threat is risky revenues, and immediately’s windfalls are a chance to diversify their economies. Many NOCs, together with Pemex, Pertamina, NNPC and more and more Ecopetrol within the case of gasoline, sit in between and face each challenges without delay, so governments want mandates that deal with each.”
IPS: What dangers do continued investments in new oil and gasoline fields pose to growing international locations, notably by way of stranded belongings, public funds and long-term vitality safety?
Shafaie: The dangers are vital, they usually fall on peculiar folks in producing international locations. Our 2023 evaluation finds that if governments meet their current local weather pledges, round 1 / 4 of NOCs’ deliberate upstream investments for 2023–2032 could by no means break even. For some — Uganda’s UNOC and Cameroon’s SNH — the determine exceeds 80%.
When a state firm’s belongings lose worth, the hit lands on public steadiness sheets, leaving much less for well being, training and diversification. Present excessive oil costs can masks these vulnerabilities within the brief time period, however they don’t take away them. The longer-term dynamics from the vitality transition are nonetheless there. It’s notably necessary for NOCs and the federal government to train fiscal self-discipline within the present context, the place market alerts could make them take better dangers. As UN Secretary Basic Guterres mentioned at COP31 ‘taxpayers mustn’t underwrite investments that lock in fossil gasoline dependence’.
IPS: The COP30 roadmap seeks to speed up the transition away from fossil fuels. What concrete coverage measures, monetary incentives and accountability mechanisms are wanted to make sure nationwide oil corporations develop into a part of this transition reasonably than obstacles to it?
Shafaie: The Brazil COP roadmap is a major step ahead in taking the “transition away from fossil fuels” from an summary thought to a foundation for nationwide planning. What occurs on the nationwide degree is what actually issues now.
The roadmap rightly asks international locations to begin now and equitably recognises that what this implies in every nation will differ, relying on publicity and capability. The strategy appears to be like completely different in every nation and might vary from beginning the phase-out of licensing and manufacturing in wealthy World North producers to beginning severe transition threat – and alternative – assessments and related planning in low- and middle-income producer international locations.
The COP30 Presidency Roadmap additionally rightly recognises the distinctive position of NOCs on the intersection of public revenues, vitality safety and industrial growth. Accordingly, for international locations with NOCs, discussions across the NOC’s future ought to be central from the beginning if transition plans are to be credible.
Worldwide cooperation also can play a significant position in supporting NOC transformations by way of peer studying round scenario-based planning, disciplined funding selections, decarbonisation and methane emissions abatement and finance for credible diversification into renewable vitality and different enterprise areas.
IPS UN Bureau Report
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