Saudis benefiting most from high oil prices

Abu Dhabi: A new report from the Energy Information Administration of the US Department of Energy showed Saudi Arabia is the main beneficiary of high oil prices.

But it noted the kingdom's spare capacity has sharply dwindled in the past few years because of higher output. Saudi Arabia controls nearly a quarter of the world's recoverable crude resources.

"Saudi Arabia's oil export revenues increased sharply [49 per cent] in 2005 compared to 2004, and are projected to increase again [6 per cent] in 2006 before falling [-7 per cent] in 2007," it said. It noted that during 2003-2004, Riyadh benefited from higher oil prices and its ability to increase production and exports sharply and rapidly due to the country's large spare production capacity at the time.

"As a result, Saudi Arabia was able to replace some of the lost production from Venezuela, Iraq and Nigeria and to reap higher revenues as a consequence. However, Saudi spare production capacity is now down to just 1.0-1.5 million barrels a day, leaving little room for increased Saudi production if needed," the report added. It estimated Saudi Arabia's income at around $153.3 billion in 2005 and forecast an increase to nearly $162 billion this year.

Its figures for war-torn Iraq showed it earned an estimated $23.4 billion in oil export revenues during 2005, more than twice the $9.8 billion earned in 2003. It expected Iraq's oil earnings to increase slightly in 2006, to $25 billion, and then fall in 2007 (to $23.7 billion) on slightly lower oil prices.

"Iraqi oil export revenue projections are complicated by high levels of uncertainty regarding future Iraqi oil exports, ongoing instability and violence that discourages contractors from making needed repairs, and continuing attacks on oil infrastructure," it said.

"In addition, it is important to note that Iraq's net revenues are actually overstated here, since EIA does not specifically take into account the amount of money over $2 billion per year spent on refined oil products the country is forced to import."

The report showed Iran, the second largest Opec producer after Saudi Arabia, earned nearly $46.6 billion in 2005 and expected the income to climb to around $50 billion in 2006.

The 2005 revenues of Kuwait and the UAE were put at around $39 billion and $45.6 billion respectively and were expected to rise to a record $44.1 billion and $53 billion this year.

Other Opec members were also expected to earn more this year after a sharp rise in 2005.