VOL. XLIV
No 48
26 November 2001
OPEC
Budget
Oil Price Assumptions Trend Lower For OPEC And Non-OPEC Producers
More
oil producing countries have announced downward adjustments to their budgetary
oil price assumptions as the prospects of a global recession grow and OPEC
awaits production cooperation from non-OPEC producers, particularly Russia (see
page A1). Mexico announced earlier in the year that it expected crude oil
exports to average $17/B in 2002 (compared to the estimated $19/B average expected
for 2001) and sent a draft budget for 2002 to this effect to Congress for
approval. However, there are now concerns that the figure is “too optimistic”
as Mexico’s Finance Minister Francisco Gil told the lower house of Congress on
22 November, noting that “the situation in the oil market has changed radically
from the time the budget was drafted.”
Nigeria’s
$18/B price assumption for 2002 came under close scrutiny when Finance
Minister, Adamu Ciroma, announced on 22 November, that revenue targets for the
existing fiscal year would not be met, although an adjustment to the price has
not yet occurred. Nigeria based its year 2001 budget on a price assumption of
$22/B and Mr Ciroma has said that the price assumption for 2002 could turn out
to be “unrealistic”.
Russia
announced on 21 November that it had amended its original 2002 oil price assumption
of $23.5/B to $18.5/B on the basis that the first forecast was too optimistic.
But according to the country’s Finance Minister Alexei Kudrin even the “the
pessimistic forecast, that is $18.5/B, has become our optimistic forecast.”
Speaking to the parliament the same day, Mr Kudrin suggested that the 2002
budget, which has yet to be ratified, should be based on an oil price range of
$14.0-18.5/B.
Indonesia’s
parliament approved an oil price assumption of $22/B on 9 October, $2/B less
than the previous year but still significantly higher than other revised oil
price assumptions. At the time, though, government officials said that a lower
price of $21/B had been considered. Algeria’s year 2002 draft budget is based
on an $22/B price assumption although the country’s Minister of Finance, Ramad
Madlasi, told a press conference on 20 November that the country was likely to
suffer economically given the fall in oil prices in relation to the budgetary
assumptions and that large-scale development projects might be cancelled as a
result.
Venezuela
has approved an $18.50/B price in its 2002 budget (compared to $20/B the previous
year) and Norway, after some draft revisions, was proposing an oil price
assumption of $20.88/B as of 9 November.
Prices
fell following the extraordinary OPEC meeting on 14 November which ended in a
conditional OPEC pledge to reduce quotas by a further 1.5mn b/d with effect
from 1 January 2002 if it received “a firm commitment from non-OPEC oil
producers to cut their production by a volume of 500,000 b/d simultaneously” (MEES,
19 November). OPEC had already pledged to reduce production by 3.5mn b/d in
2001. The organization had argued that any further production cuts in a global
recession necessitate mutual output restraint from non-OPEC producers.
Saudi
Arabia is set to ratify its 2002 budget before the end of the year (if last
year is anything to go by, sometime after the end of the month of Ramadan).
Mostly likely, the kingdom will shift its oil price assumption from the
$20-21/B (MEES estimates) range of last year in the direction of the
$19.6/B average of the five new price assumptions listed above. The price of
Saudi crude is estimated to have averaged around $22/B for the year 2001 (MEES,
5 November and 29 October), but the Saudi Arabian Minister of Finance and
National Economy, Ibrahim al-'Assaf, has cautioned that the country may incur a
small budget deficit for the financial year 2001 (MEES, 12 November).
Saudi Arabia passed a SR215bn ($57.3bn) budget on 18 December last year which forecast a zero deficit for the first time
in over a decade and which included a 37% increase in revenues and a 16%
increase in expenditures over the previous year (MEES, 25 December
2000).
Crude Oil
Export Prices For Selected Oil-Producing Countries(1)
|
|
Budget Oil Price Assumption* |
Price Avg(2) |
Price Avg(2) |
|
|
|
|
Country |
$/B 2001 |
$/B 2002 |
($/B - 2000) |
($/B - 2001) |
Fiscal Yr |
MEES Reference |
|
Algeria |
22 |
22 |
28.8 |
- |
Calendar Yr |
3 Apr 2000 |
|
Bahrain |
15-18 |
15-18 |
- |
- |
Calendar Yr |
13 Nov 2000 |
|
Indonesia |
24 |
22 |
28.8 |
- |
1 April-31 Dec |
- |
|
Iran |
13.80 |
20 |
25.0 |
24(5) |
21 Mar-20 Mar |
26 Feb |
|
Kuwait |
15 (2001-02) |
- |
25.9 |
23.50 |
31 Mar-1 April |
29 Oct |
|
Mexico |
18 |
17 |
- |
19 |
Calendar Yr |
- |
|
Nigeria |
22 |
18 |
28.5 |
- |
Calendar Yr |
- |
|
Norway |
22.3 |
20.88 |
- |
- |
Calendar Yr |
|
|
Oman |
18 |
- |
26.6 |
22 |
Calendar Yr |
- |
|
Qatar |
15 (2000-01) |
- |
27.6 |
- |
31 Mar-1 Apr |
17 Apr 2000 |
|
Russia |
- |
18.50 |
- |
18 (2001-02)(4) |
Calendar Yr |
- |
|
S. Arabia |
20-21 |
- |
25-27 |
22 |
Calendar Yr |
1 Jan |
|
Syria |
24 |
- |
25.0 |
- |
Calendar Yr |
15 Jan |
|
Venezuela |
20 |
18.50 |
26.3 |
21.61(3) |
Calendar Yr |
8 Jan |
|
Yemen |
22 |
- |
28.2 |
- |
Calendar Yr |
11 Dec |
(1) Figures are
drawn from a variety of official and non-official sources.
(2) Estimated actual.
(3)
As at 17 October.
(4) According to Troika Dialog Bank estimates.
(5) For 1H FY2001-02
* Budget oil price assumptions are based on
the price of export crude.
Copyright © 2001 Middle East Economic Survey