Major Non-OPEC Countries' Oil Revenues

Oil prices fell sharply after the terrorist attacks of September 11, 2001, but rebounded in early 2002 and 2003. In 2004 and the first half of 2005, prices increased sharply in the face of limited OPEC spare production capacity and rapid world oil demand growth. Fluctuating oil prices (and revenues) can have a significant impact on non-OPEC oil exporting countries, such as Mexico, Norway, Russia, and others.

For Mexico, higher oil prices have a generally, but not completely, positive impact on the country's overall economy.  One mitigating factor is that oil export revenues make up less than a tenth of Mexico's total exports, down from more than 70% two decades ago. Increased oil prices also tend to hurt Mexico's main customer for its non-oil exports, the United States, which in recent years have represented a rapidly growing sector of Mexico's economy. Finally, higher oil prices tend to increase inflationary pressures and interest rates in Mexico, while reducing pressures for important economic reforms. On the other hand, despite the fact that Mexican oil export revenues make up only a small percentage of total export revenues, they account for around one-third of government income, meaning that the oil sector plays a major (even disproportionate) role in Mexican economic policy. 

For 2004, EIA estimates Mexican oil export revenues of about $21 billion, up 27% from 2003, on net oil exports of 1.8 million bbl/d and an average price for Mexican oil -- mainly heavy Maya crude -- of nearly $32 per barrel. For 2005 and 2006, Mexico's oil export revenues are expected to increase, reaching $25 billion by 2006. Mexico's main crude export grade is heavy sour Maya, which is of relatively low quality and therefore fetches a relatively low price on world markets. The other main Mexican export crude is light Isthmus, which sells for around $5-$10 per barrel more than Maya.

Mexico's economy is expected to grow at a 4.2% rate in 2005, about the same as the 4.4% growth experienced in 2004.   In general, Mexico's economy appears to be recovering from a recession which began in 2001. Mexico's 2005 budget assumes a price for Mexican oil of $27 per barrel, compared to $20 per barrel in the 2004 budget. The assumption for 2004 was around $12 per barrel below the actual estimated price for Mexican oil in that year, resulting in a significant budget surplus. Under Mexican law, oil revenues earned above budgetary assumptions go to fund infrastructure projects in the states, with the rest going to pay down government debt and also back to Pemex, the state oil company. Overall, Pemex sends about 60% of its income to the federal government in royalties and taxes, and is faced with a huge debt burden (over $40 billion) despite its high revenues. Among other things, this means that Pemex does not have a great deal of money to invest in oil exploration. To date, however, Mexico has been unwilling to open the oil sector to private (including foreign) investment.

Russia depends upon energy (mainly oil and natural gas) exports for critical shares of its total export earnings (around 50% in 2003) and government revenues. Oil export revenues also are used to help pay off Russia's large (around $108 billion as of April 2005) foreign debt.  Thus, oil price fluctuations are of definite concern to Russia.  The sharp rebound in oil prices over the past few years has been good news overall for Russia -- and especially its oil sector -- after an extremely difficult 1998 and early 1999. During 2000-2004, for instance, Russia's top oil producers made windfall profits, resulting in billions of dollars worth of additional tax revenues to the Russian government.  Many Russian oil companies also have begun to upgrade decaying oil infrastructure and to undertake new exploratory drilling. EIA is forecasting Russian oil export revenues at $109 billion for 2005, up 22% from 2004 (which marked the highest revenues in "real" terms since 1990), on higher oil prices and slightly higher net oil exports.

In addition to oil prices, Russian oil production has rebounded over the past few years. In 2004, Russia produced around 9.3 million bbl/d of oil, up over 50%, from 6.1 million bbl/d, in 1998. For 2005, Russian oil production is expected to average about 9.5 million bbl/d, with consumption of 2.6 million bbl/d and net exports of 6.8 million bbl/d.

Buoyed by surging oil export revenues, Russia's real gross domestic product (GDP) grew 10% in 2000, with slower (but still strong) growth in 2001 (5.1%), in 2002 (4.7%), and in 2003 (7.3%). Russia's real GDP grew strongly again in 2004, at a 7.1% rate, with 5%-6% annual growth expected during 2005 and 2006. The oil export revenue windfall experienced by Russia since 2000 has helped the Russian government pay down some of its large foreign debt and to run significant budget and trade surpluses, with an estimated $88 billion merchandise trade surplus and a $60 billion current account surplus in 2004. In addition, Russia's foreign exchange and gold reserves totaled around $125 billion at the end of 2004.

On a related note, the Russian government recently has been attempting to capture more of the country's oil revenues from oil companies, in part by raising their taxes and in part by cracking down on their use of tax "loopholes." It is estimated that Russian oil and natural gas revenues provide at least 40% of the national government's budget (and over half of export earnings), mainly through taxes on hydrocarbon production and duties on exported crude and products. In the long term, the International Monetary Fund (IMF) and others have warned that Russia remains overly dependent on hydrocarbons, recommending that Russia push ahead with economic reform and diversification.

For 2005, Russia reportedly is assuming (for budgetary purposes) an average oil price of around $20-$21 per barrel for the country's benchmark Urals crude stream, well below EIA's forecast of around $45 per barrel for Russian crude. Plans are for extra revenues above the assumed budget price to be transferred to the country's Stabilization Fund, which was expected to reach $19 billion by the end of 2004 (and $30 billion by the end of 2005). In general, President Putin has stated that windfall oil revenues should be spent on paying off foreign debt (see above), as opposed to financing new pipeline projects.

Since 1999, Norway has experienced strong oil export revenues, raising concerns over possible economic overstimulation and also over how to allocate the money. In November 2003, Norway's government and opposition agreed on a budget for 2004, including some increases in spending (on health, education, and other social services, for instance) and $7 billion in transfers from the country's nearly 15-year-old Petroleum Fund (which stood at more than $150 billion as of September 2004).  The strength in oil revenues had raised concerns of an overheated Norwegian economy, including increased inflationary pressures, but Norway's economy grew by only 1.1% in 2002, 0.4% in 2003, and 2.9% in 2004. As a result, Norway's central bank has cut interest rates ten times since November 2002, from 7.1% down to 2.1% currently. Meanwhile, there have been increasing calls to tap into Norway's oil revenue windfall for various purposes, including lower taxes, increased social spending, and reductions in the country's budget deficit. Norway's budget for 2005 called for cutting income taxes while raising consumption taxes. For 2004, EIA estimates that Norwegian oil export revenues reached $38 billion, 19% higher than in 2003, and nearly three times as high as in 1998. For 2005 and 2006, Norway's net oil export revenues are forecast at about $46 billion each year.

Egypt's economy was hurt following the September 11, 2001 terrorist attacks on the United States, with lower oil export revenues (as prices fell) and reduced tourist revenues hurting the country's GDP growth. Since then, Egypt's economy has grown slowly, in part due to regional tensions and a world economic slowdown, with real GDP growth of only 3.2% in 2002, 3.1% in 2003, and 5.0% in 2004. For 2005 and 2006, Egypt's real GDP growth is expected to continue relatively strong growth of around 4.5%-4.7%. Besides oil exports, tourism, foreign aid, and revenues from the Suez Canal, the other major source of income to Egyptians is so-called "remittances" from Egyptian workers in oil-rich Persian Gulf states. Increased oil prices tend to help remittances.  For 2004, Egypt is estimated to have earned oil export revenues of about $1.6 billion, down sharply from the $3.3 billion earned in 1996, mainly on declining oil production and net oil exports. Over the next two years, Egypt's oil export revenues are expected to decline by 13%, reaching just $1.4 billion in 2006, on lower net oil exports.

Low oil prices between late 1997 and early 1999 adversely affected the United States oil industry, with U.S. crude oil production falling more than 500,000 bbl/d from the fourth quarter of 1997 through the first quarter of 1999. In large part, this decline was due to shut-ins at small, so-called "marginal" wells (i.e., wells producing 15 bbl/d or less) in places like Oklahoma and Texas. In addition, oil (and gas) investment fell.  Since 1999, higher oil prices helped slow the decline in U.S. domestic crude oil production. However, U.S. crude output still fell, from 5.88 million bbl/d in 1999 to 5.68 million bbl/d in 2003. For 2004, U.S. crude oil production fell by about 250,000 bbl/d, to 5.43 million bbl/d, in large part due to Hurricane Ivan in mid-September.

Fluctuating oil prices affect the cost of U.S. oil imports and the U.S. trade balance.  In 1998, the United States imported (net) around $44 billion worth of oil. This increased to $60 billion in 1999 and $109 billion in 2000. For 2001 and 2002, U.S. oil imports were somewhat lower, at around $94 billion each year, before increasing again to around $122 billion in 2003 and $166 billion in 2004. In general, higher oil prices have a negative macroeconomic impact on the United States, including increased inflationary pressures and a deterioration in the merchandise trade balance. A "rule of thumb" used by the Energy Information Administration estimates that a sustained 10% increase in the price of oil could lower the real U.S. GDP growth rate by between 0.05 and 0.1 percentage points relative to its baseline level over a year.

Major Non-OPEC Countries: Net Oil Export Revenues at a Glance
	Nominal Dollars (Billions)					Constant $2005 (Billions)
	Change 2005/2004	2004E	2005F	2006F		1980E	1998E	2003E	2005F	2006F
Angola	49%	$12.4	$18.6	$22.2		$2.8	$3.4	$9.0	$18.6	$21.8
Colombia	21%	$3.6	$4.4	$3.1		-$0.5	$2.4	$3.1	$4.4	$3.0
Egypt	-15%	$1.6	$1.3	$1.4		$7.0	$1.5	$1.7	$1.3	$1.4
Mexico	15%	$20.9	$24.2	$24.6		$20.9	$6.2	$16.9	$24.2	$24.1
Norway	21%	$37.7	$45.6	$46.1		$9.4	$15.3	$32.7	$45.6	$45.3
Oman	18%	$9.2	$10.9	$11.3		$6.4	$4.2	$7.4	$10.9	$11.0
Russia	22%	$89.5	$108.8	$113.2		$273.0	$17.3	$60.2	$108.8	$111.2
Sudan	29%	$2.9	$3.8	$4.9		-$0.4	-$0.1	$1.9	$3.8	$4.8
Syria	-2%	$2.4	$2.4	$2.2		$1.3	$1.4	$2.7	$2.4	$2.2
United Kingdom	-65%	$2.4	$0.9	-$2.1		-$0.4	$5.8	$7.3	$0.9	-$2.1

Return to OPEC Revenues Fact Sheet

File last modified: June 16, 2005

Contact:

Charles Esser
charles.esser@eia.doe.gov
Phone: (202)586-6120
Fax: (202)586-9753

URL: http://www.eia.doe.gov/cabs/opecnon.html

If you are having technical problems with this site, please contact the EIA Webmaster at wmaster@eia.doe.gov