Oil and Gas

A number of countries in the region are particularly well-endowed with hydrocarbon resources. While some are enjoying the benefits of having made strides towards creating business environments that attract investment, others have

The key issues facing the oil and gas subsector are:

• Outmoded exploration/production technologies in a number of countries leads to poor production practices and causes pollution (examples being excessive gas flaring and inadequately capped wells).
• Excess refining capacity, with obsolete configuration and poor environmental performance.
  In several countries, inadequate legal and regulatory frameworks impede the inflow of foreign capital and know-how.
• Prices generally cover costs, but in the countries of the former Soviet Union collection of payments remains a major problem, particularly, in the gas subsector.
• Despite large gas reserves and generally well-developed gas transmission networks, gas is underutilized for space heating in most of the region.
• The inclination of politicians to control resources and the desire of monopolists to preserve their privileged status create a powerful coalition against liberalization of the market, particularly for gas.
• Transportation of oil and gas to markets that are a substantial distance from production locations poses significant political and commercial risk.
• The current high price of oil has created a false sense of security and has discouraged some countries from establishing business environments that support private investment (a critical source of funding that will be even more important as oil prices return to historical norms).