A new report from risk consultancy firm Verisk Maplecroft has found 40% of the world’s oil and gas reserves are under threat from extreme weather conditions as a result of climate change.
The report, published Thursday this week, says flooding, high temperatures and rising sea levels are putting more than 600 billion barrels equivalent of recoverable oil and gas at risk, with reserves from the Middle East and North Africa – in particular Nigeria, Saudi Arabi and Iraq – at the greatest risk.
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The reliance of these nations on oil for economic development coupled with their exposure to heat stress and water shortages puts them in a precarious position, with Maplecroft labelling the vulnerability to extreme weather as the “Achilles’ heel” in their energy strategies.
Examples of climate-related threats to oil and gas supply are already being seen this year, with a pushing output to the lowest trough seen in the past three years, and Hurricane Ida triggering 55 spills in the Gulf of Mexico, a new record.
The risk group cautions that at this stage, the cost of climate inaction could be “genuinely existential”.
The research found just over 10% of the world’s commercially recoverable reserves are found in areas deemed extreme risk by the climate change exposure indices, while just under a third are found in sites labelled high risk.
In response, the group says nations should identify and disclose the risks in line with the Task Force on Climate-Related Financial Disclosures recommendations.
“To keep investors onside,” the report reads, “energy companies will need to show that the raft of net-zero targets they’ve unveiled are actually supported by corporate policy, by investment and by action.”
Through getting a better understanding of the risks oil and gas currently face, Maplecroft says companies will then be able to strengthen lower risk assets, turning investment attention towards them and towards climate mitigation strategies.
