Decline in oil prices and production costs GCC states $ 20 bn

A decline in oil prices and production cost the six GCC countries more than $ 20 bn last year to depress their gross oil export earnings to around $ 106.3 bn and turn a budget surplus into a deficit in some members, according to a UN estimate. The UAE and the other five members, Saudi Arabia, Bahrain, Kuwait, Qatar and Oman, earned nearly $ 129 bn in 2000 when crude prices climbed to an average $ 27, one of their highest levels since the end of the oil boom in early 1980s.
This means their revenues shrank by nearly $ 22.7 bn in 2001 as a result of a 16.2 % decline in average crude prices and output cuts in line with a collective agreement between OPEC and other producers to prevent a price collapse. According to the UN's Economic and Social Commission for West Asia (ESCWA), Saudi Arabia was the main victim of last year's loss given its huge supplies which accounted for more than half the GCC's total oil supplies of 14 mm bpd. From around $ 75 bn in 2000, Saudi Arabia's earnings slumped by nearly 20 % to $ 59.4 bn in 2001, while the UAE lost around $ 4 bn to $ 18 bn.

Kuwait's oil revenues contracted by $ 3 bn to $ 13.2 bn while the crude export income of the other member states also recorded declines. "The performance of the oil sector in the GCC and other ESCWA members was not strong as it was in 2000. Prices slipped by around 16.2 %, while overall production dropped by nearly 600,000 bpd to 18 mm bpd," the report said.
It said the bulk of production cuts were recorded in Saudi Arabia and the UAE, whose actual supplies were down by 2.2 and 1.6 %, respectively. Kuwait and Qatar boosted their output by nearly 2.9 and 5.1 % in 2001.

"The decline in the oil revenues had a stronger impact on the economies of the GCC countries given their heavy reliance on oil exports," said ESCWA, which groups the GCC with Yemen, Lebanon, Jordan Syria, Iran, Iraq and other Middle Eastern countries. „Their budgets and current account were also hit, for example, Saudi Arabia and Bahrain recorded a large surplus in 2000, but it turned into an actual deficit of around 1.6 and 4.1 % of the gross domestic product in 2001. As for the UAE, it recorded a slight shortfall in 2000 but it was bigger in 2001 because of high spending and lower income."

The report gave no forecasts for this year but the London-based Centre for Global Energy Studies, which is owned by former Saudi Oil Minister Ahmed Zaki Al Yamani, expects the GCC's revenues to extend a downward trend because of additional supply reductions and a projected fall in prices to around $ 22 from $ 23.5.
The Centre's latest outlook for the GCC's combined oil sales is around $ 90 bn this year, nearly $ 16 bn below 2001.