OPEC Revenues Could Fall By 19% In 2001 Says EIA

VOL. XLIV

No 52

24/31 December 2001

OPEC

OPEC Revenues Could Fall By 19% In 2001 Says EIA

OPEC oil revenues for the year 2001 are expected to fall by around 19% to $197bn, according to the US Department of Energy’s Energy Information Administration (EIA), or 10% less than the EIA’s earlier forecast. In its latest OPEC Revenues Fact Sheet, December, the EIA estimates that net OPEC oil export revenues will fall a further 14% to around $169bn in 2002 – 30% lower than in 2000. As a result of this drop-off, says the EIA, OPEC net oil export revenues in real terms average around the levels seen in the early-to-mid-1990s, but far below levels seen from 1974 through 1985, prior to the oil price collapse of 1985-86. According to the EIA, “this boom-bust cycle of oil revenues is making budgetary planning difficult in many OPEC countries, and also complicating efforts in many cases to deal with balance of payment deficits, accumulated debt, budget problems and rapid population growth”.

The EIA notes that while sharply increased oil prices during 1999, 2000 and the first 8 months of 2001 resulted in dramatic economic improvements in OPEC countries, thereby lessening the pressure for economic reform and allowing for increased spending, the downtrend for oil prices creates new challenges. “The current and forecast decline in OPEC oil revenues is once again increasing pressures to make difficult political choices (like cutting popular state subsidies for food and fuel).” Such challenges are further compounded by the relatively high oil price assumptions adopted by OPEC countries in their year 2001 budgets. The EIA says that “most OPEC countries are now in the process of adopting budgets for 2002, and are generally ratcheting down oil price (and revenue) assumptions,” adding that fiscal discipline and pushing for economic reform are gaining in importance. (For selected oil prices assumptions for the fiscal year 2002, see MEES, 26 November).

The EIA notes that OPEC revenues peaked in 1980 at $598bn and reached their lowest level since 1972 in 1998, when they were only $113bn (in constant $2000). For the year 2001, OPEC revenues in constant 2000 dollar terms are estimated at $193bn, or only 32% of 1980 revenues but more than 70% more than 1998 revenues. For the 1990s as a whole (1991-2000), says the EIA, OPEC oil export revenues (in constant $2000) were $1.6 trillion, compared to $2.4 trillion in the 1980s and $3.3 trillion in the 1970s. “Thus total OPEC oil export revenues in real terms during the 1990s were only about half of revenues in the 1970s.”

In terms of individual members’ shares of overall revenues, the EIA says that Saudi Arabia “consistently has earned more oil export revenues than any other single member of OPEC, with the Saudi share ranging from below around 16% in 1971 to as high as 46% in 1981, and 30% in 2001.” Iran’s share fell after the revolution and has not recovered since, says the EIA, with Iran today accounting for some 10% of the total (compared to 17-19% in the 1970s). Iraq’s share of total revenues has fluctuated from a high of 14% in the late 1980s to near 0% for several years following the invasion of Kuwait in 1990; but revenues have increased over the past three years under the UN “oil-for-food” program. “Iraq’s share of total OPEC oil revenues is now around 7.5% (not including illegal oil exports, outside the UN deal),” the EIA says.

OPEC Revenues

	$Bn (Nominal)			$Bn (Constant 2000)
	2001E	2002F	Change %	1972E	1980E	1986E	2002E
Algeria	11.1	9.7	-13	5.5	27.5	7.2	9.4
Indonesia	4.4	3.8	-13	3.7	31.8	7.7	3.7
Iran	20.5	16.4	-20	17.1	28.0	9.1	15.9
Iraq	14.8	15.9	+7	6.0	57.8	10.6	15.4
Kuwait	14.9	12.5	-16	11.5	40.1	10.0	12.1
Libya	11.0	9.2	-16	12.2	47.6	7.4	8.9
Nigeria	17.0	14.1	-17	8.7	51.0	10.2	13.7
Qatar	6.5	5.5	-15	1.8	11.4	2.3	5.3
Saudi Arabia	58.2	49.6	-15	19.3	223.2	31.2	48.0
UAE	18.0	15.2	-16	4.3	40.3	10.5	14.7
Venezuela	20.3	16.8	-17	12.7	38.9	11.1	16.3
Total	196.7	168.8	-14	102.8	597.5	117.2	163.3