2022 To Bring Record Payments To Governments From The Oil And Gas Sectors
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2022 To Bring Record Payments To Governments From The Oil And Gas Sectors

By CIOReview | Friday, May 27, 2022

Oil and gas sector payments to governments are expected to reach an all-time high of USD 2.5 trillion in 2022, smashing the previous record of USD 2.1tn in 2011, amid higher prices and increasing production, according to a new report from Rystad Energy.

FREMONT, CA: Saudi Arabia, Opec's largest producer, is poised to top the chart in terms of overall cash flow to the government from the upstream sector — related to exploration and production — this year, followed by the US and Iraq. Middle Eastern producers dominate the top ten list. Following the coronavirus pandemic, total tax revenue from the oil and gas sector fell to $600 billion in 2020 due to lower commodity prices. Last year, however, it increased to USD 1.4 trillion as oil and gas prices recovered due to increased demand.

Oil prices, which increased by over 67 per cent in 2021, are continuing to rise this year due to supply concerns caused by Russia's military invasion of Ukraine. Brent, the worldwide benchmark for two-thirds of the world's oil, is up more than 30 per cent this year after sliding from a 14-year high of about USD 140 per barrel in March. Saudi Arabia and Russia are leading Opec+ producers in progressively increasing output as they reverse record output cuts of 9.7 million barrels per day set between May 2020 and July last year. Every month, the company adds 400,000 BPD to the market, which is expected to rise to 432,000 BPD in May. Higher commodity prices are expected to boost oil and gas companies' earnings, according to Moody's Investors Service, which revised its outlook for the global energy industry to positive from stable earlier this month. Higher oil prices will increase the earnings of energy businesses involved in exploration and production, refining and marketing, and oilfield services, according to the rating agency.

According to the country’s Ministry of Oil, the country's crude oil exports in March totalled more than 3.24 million barrels per day, generating USD 11.7 billion in income, the highest since 1972. Iraq, Opec's second-largest producer, is highly reliant on oil revenues to reconstruct its economy following decades of conflict. Due to strong investment rates, low domestic gas costs, and low corporate tax rates, the country has a very high government take per produced barrel, just under USD 100, whereas the US is on the other end of the range, with an average government take per produced barrel of approximately USD 20.