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Climate change threatens up to 40 per cent of world’s oil and gas reserves

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Some 40 per cent of the world’s oil and gas reserves are at risk from more frequent storms, rising sea levels, and temperature extremes brought about by climate change, a report has found.

Risk consultancy firm Verisk Maplecroft said that Saudi Arabia, Iraq and Nigeria are among the oil- and gas-producing countries with the highest risk of climate-related events disrupting their supply.

Between them, these three countries account for nearly 19 per cent of commercially recoverable oil and gas.

Furthermore, climate-related supply threats to the sector have already begun to manifest, such as recent freezing conditions in Texas that knocked US oil and gas output to a three-year low, while Hurricane Ida caused a record 55 spills in the Gulf of Mexico and created historic disruptions to the supply of both crude oil and refined products.

Record heat in Russia accelerated the melting of permafrost, a trend that has damaged 40 per cent of buildings and infrastructure in northern regions heavily reliant on oil and gas production.

The report finds that these types of events are going to become more frequent and more extreme, creating even greater shocks within the industry.

Identifying and disclosing these risks “is now a strategic necessity for energy companies” if they are to mitigate these threats in the future and offset investor concerns, it added.

Onshore oil and gas operations are typically exposed to the full range of the physical impacts of climate change, including sea-level rise, storms, heatwaves, flooding, and other extreme weather events, while offshore operations, such as in the Gulf of Mexico, are vulnerable to tropical cyclones and extreme wave heights.

The research found that 10.5 per cent of global commercially recoverable reserves are found in areas rated as extreme risk in the Climate Change Exposure Indices, while 29.5 per cent were high risk. In total, this amounts to around 617 billion barrels equivalent.

"These types of events are going to become more frequent and more extreme, creating even greater shocks within the industry," said Rory Clisby, environmental analyst at Verisk Maplecroft.

In October, the UN Environment Programme found that plans to expand fossil fuel projects over the next decade are severely out of line with the ambition to cut greenhouse gas emissions and limit temperature rises to 1.5°C.

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