OPEC's USD1trn revenues

OPEC countries are expected to generate another trillion dollars in revenues in 2012 for the second year in a row, but analysts don't expect a repeat in 2013 as demand for OPEC oil is set to weaken.

03 January 2013
OPEC's oil revenues are estimated to cross a trillion dollars in 2012, hitting USD1.052-trillion - the group's biggest revenue haul ever.

The figure eclipses last year's record revenues of $1.027-trillion in nominal terms, according to data compiled by the U.S. Energy Information Administration, or the EIA.

Saudi Arabia, which has already raked in USD291-billion in the first eleven months of 2012, is expected to exceed the record USD310-billion collected in crude-related revenues a year earlier.

Adjusted for inflation, OPEC's oil revenues are expected to reach USD895-billion in 2012, a marginal improvement over the USD891-billion earned in the previous year.

The UAE was the second largest crude earner in the group, with USD94-billion earned in the first eleven months of 2012 (or USD80-billion adjusted for inflation), although it may not beat its 2011 high of USD101-billion, despite record production in the year.

Nigeria was the third biggest beneficiary of oil revenues, raking in USD84-billion in nominal terms for the first 11 months of 2012.

Libya and Iraq, two of OPEC's rising stars, also saw a giant leaps in earnings.

Iraq is estimated to have earned USD75-billion in the first 11 months of the year, compared to USD71.2-billion for the whole of last year, as output soared to more than 3.1 million bpd in 2012, compared to 2.66 million bpd in 2011, despite political uncertainty and tensions with Big Oil.

Meanwhile, Libya has already exceed crude revenues earned in 2010, having netted USD46-billion in real terms till November this year, compared to US44.5-billion in all of 2010. The country's revenues had shrunk to USD14.3-billion in 2011 on account of the civil war.

Not every country benefited from high Brent crude prices, which stayed in triple figures throughout 2012.

Iran saw its revenue fall from USD95.4-billion in 2011 to USD64-billion in the first 11 months of 2012, as Western sanctions cut off Iranian crude from world markets. OPEC data shows Iran's output has fallen from a high of 3.6 million bpd in 2011 to 2.6 million bpd in 2012.

"Iran's crude oil production is estimated at 2.6 million bpd in November 2012, indicating at least a temporary bottoming out of Iranian production declines," said the EIA.

"Iranian production had been falling since at least the last quarter of 2011. The latest round of U.S. and EU sanctions contributed to declines in Iranian production during the second and third quarters of 2012. However, preliminary trade numbers show that exports rose to 1.3 million bpd in October, at least temporarily slowing down the production declines."

All in, the group's revenues have tripled in nine years, suggesting a tremendous improvement in the group's fortunes.

However, the revenues per capita has only doubled during the same period, from USD1,049 in 2004 to USD2,298 in 2012, partly because OPEC countries have seen their populations rise at a fast clip and have also consumed more of their crude over the past few years.

While 2012 was a record year for the oil-producing group, the EIA does not expect 2013 to be a bumper year, and forecasts OPEC revenues to fall below a trillion dollars in the New Year.

This will partly be driven by lower crude prices and less call on OPEC output in global markets.

The EIA expects Brent crude to decline from an average of USD11.57 per barrel in 2012, to USD103.75 per barrel in 2013, and OPEC crude production to fall from 31 million bpd in 2012 to 30.35 million in the New Year, leading to greater OPEC spare capacity.

The figure is higher than OPEC's own estimated 29.7 million bpd output in 2013, according to the group in its latest monthly report.

"World oil demand growth in 2013 is expected to remain at 0.8 million bpd," said OPEC. "However, weakness in the global economy is causing a great deal of uncertainty for the forecast for world oil demand, which has a downward risk, especially in the first half of the year."

EIA estimates that OPEC surplus capacity, which is overwhelmingly concentrated in Saudi Arabia, remained relatively tight by historical standards at two million bpd over the past three months.

"Projected OPEC surplus capacity increases to 3.3 million barrels per day by the second quarter of 2013. This estimate does not include additional capacity that may be available in Iran but which is currently offline due to the impacts of U.S. and EU sanctions on Iran's ability to sell its oil."

UK-based Centre for Global Energy Studies has warned that OPEC is not producing enough oil to meet rising demand, which could affect the revenue it earns.

However, oil prices might surprise on the upside, upsetting EIA estimates.

"Even with our relatively pessimistic view of global oil demand growth this year, which we see at just 0.7%, OPEC's recently agreed aggregate output level of 30 mbpd looks too low, unless there is a surge in non-OPEC output," notes GCES.

"The lack of formal individual quotas, however, should allow for a flexible response from Saudi Arabia, the only member-country with significant spare capacity. The Kingdom's oil minister said recently that his country favoured an oil price around $100/bbl and it can be expected to manage its output to keep the price around this level."

© 2013


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