OPEC battles to regain crude oil revenue



MEMBERS of the Organisation of Petroleum Exporting Countries (OPEC) have continued to suffer huge drop in yearly revenue as a result of the uncertainty of oil prices.

According to the OPEC’s yearly statistical bulletin, oil revenues dropped in 2014 below the psychological $1 trillion mark for the first time since 2010, which may be a sign that the cartel was yet to overcome the economic impact of lower prices for oil-rich nations.

OPEC said last week in its yearly statistical report that its 12-members earned $964.6 billion selling their petroleum, down by 12.7 per cent from $1.1 trillion in 2013 and the lowest amount since 2010. Specifically, Nigeria’s export earnings from crude oil in 2014 dropped from the $89 billion (about N19 trillion) it recorded in 2013 to $77 billion (about N16 trillion).

The country therefore, may have lost over N3 trillion from crude oil export earning as a result of the uncertainty of crude oil prices at the international market. Nigeria and Venezuela are plagued by similar issues relating to their economic and political instability.

With their export revenues to the tune of $77 billion and $58 billion respectively in 2014, both nations have registered a steep decline of more than 30 per cent from previous years. Saudi Arabia earned the largest share of OPEC oil revenues, with $285 billion, followed by the United Arab Emirates with $107 billion. Iran oil export revenue fell to $53.6 billion, the lowest since 2005, due to the impact of European and U.S. sanctions on its ability to sell petroleum.

By producing close to 40 per cent of the world’s combined crude oil, OPEC’s oil exports represents about 60 per cent of the total petroleum traded internationally. In spite of having such clout, 2014 has been kind of odd for the cartel as there was a considerable drop in OPEC’s revenues.

As per Energy Information Administration, OPEC earned close to $730 billion in net oil export revenues in 2014, which was a decline of 11 per cent from 2013.

According to the cartel, the group’s share of the global crude market sank to 41.8 percent in 2014, down from 43.3 percent the year before.

The 1.5 per cent slide marks OPEC’s lowest crude market share level since 2003, Bloomberg News said. According to the bulletin, Libya accounted for over half of OPEC’s output decline as two rival governments continue to fight for control of the oil rich country. Last year, Libya’s crude production plummeted 52 percent to 480,000 barrels per day, just a fraction of the nearly 1.6 million barrels per day the country was pumping before dictator Muammar Gaddafi was overthrown in 2011.

Despite attempts to preserve market share in Asia, OPEC’s exports to the region fell to 13.7 million barrels per day last year, a 541,000 barrel per day drop. OPEC said in the report that the price of a basket of crudes produced by its members averaged $96.29 in 2014, down from $105.87 in 2013, a drop of nine per cent.

The report stated: “World proven crude oil reserves stood at 1,492.9 billion barrels at the end of 2014, 0.2 per cent higher as compared to the end of 2013. “The largest non-OPEC additions originated in North America, particularly the US, as well as Asia and Pacific predominantly China and India.

Proven crude oil reserves in OPEC Member Countries remained largely unchanged at the end of 2014, as compared to 2013 and reached a level of 1,206bn b. The overall OPEC percentage share of world proven crude oil reserved at the end of 2014 stood at 80.8 per cent. In 2014, world crude oil production averaged at 73.4 million barrels/day, increasing by 0.7 per cent, over 2013. Noticeable increases originated in North America, particularly the US, as well as in Western Europe, more specifically Norway.

“Crude oil production declined year-on-year in Africa and the Middle East, and remained relatively flat in other regions”. Crude oil production in OPEC Member Countries reached 30.7m bpd during 2014, down 2.9 per cent from 2013, year-on-year”.

It put the overall OPEC share to the world crude production total in 2014 at 41.8 per cent, lower than in 2013, when it was 43.3 per cent.

Non-OPEC oil supply and OPEC NGLs, as well as non-conventional oil production, also inched to 62.3m bpd, increasing by 3.9 per cent as compared to the 2013 levels.

World oil demand averaged at 91.3m bpd in 2014, up by 1.1 per cent year-on-year, with the largest increases taking place in China, the Middle East — particularly in Saudi Arabia, Islamic Republic of Iran, Qatar and the United Arab Emirates, — and in non-OECD Asia.

The report said that the 2014 oil demand in Africa and Latin America continued its upward trend, while oil demand declined for another year in Western Europe. “Total OECD oil demand fell slightly during 2014, while oil demand in OPEC Member Countries increased strongly for another year by 2.9 per cent, as compared to 2013.

Distillates and gasoline account for around 55 per cent of total world oil demand and are on increasing trend, while residual fuel oil requirements declined for another year”.

It stated that in 2014, the majority of crude oil from OPEC Member Countries was exported to Asian and Pacific countries (13.7m bpd or 60.4 per cent). Substantial volumes of crude oil from OPEC Member Countries were also exported to Europe (3.8m bpd or 16.7 per cent) and North America (3.1m bpd or 13.9 per cent).

“Asian and Pacific countries were the largest importers of OPEC Member Countries petroleum products (2.7m bpd or 60.8 per cent). North America was the region in 2014 that recorded the largest yearly increase in oil exports (0.7m b/d or 11.7 per cent) with the bulk of these volumes being petroleum products.

OPEC Member Countries petroleum products exports in 2014 stood at 4.5m b/d, while during the same year the imports were at 1.6m b/d, up 1.4 per cent year-on-year”, OPEC noted.

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