As Oil Price Jumps, Cash Flow to Producing Nations Hits $2.5trn in 2022

Emmanuel Addeh

Sustained high commodity prices and increasing oil and gas supply are set to push upstream sector payments to governments to an all-time high of $2.5 trillion this year.

The new figure smashes the previous record of $2.1 trillion set in 2011, a document by Rystad Energy research has shown.

Saudi Arabia is, unsurprisingly, set to top the table in terms of total cash flow to government from the sector this year, followed by the US and Iraq, with the top 10 list dominated by Middle Eastern producers. 

Government take varies considerably between nations, however, with Norway and Iraq seeing an average take per produced barrel of oil equivalent (boe) of around $100, while for the likes of the US and Canada the figure is below $20 per boe.

But despite the huge fortunes reaped by oil-producing nations of the world, Nigeria continues to borrow to fund its budget as it currently lacks capacity to meet its production quota coupled with huge subsidy costs that are eating into its resources.

“The leap to a record high in revenues is being driven by a combination of high oil and gas prices and lower costs. A year ago, it looked like the era of trillion-dollar revenues might have been behind us.

“Today, it is clear that we are heading into a super cycle that will benefit petro states. These record revenues present an unparalleled opportunity to diversify economies,” said Espen Erlingsen, Head of Upstream Research at Rystad Energy

Saudi Arabia will be the largest beneficiary in absolute terms and is expected to receive just above $400 billion from its cornerstone industry this year, an increase of almost $250 billion from 2021. 

The US, when including royalties paid to private landowners, takes second spot with around $250 billion paid to government, an increase of $100 billion compared to 2021. Iraq follows with about $200 billion in total tax income, a doubling of its income compared to 2021.

Norway’s position in fourth comes despite being only the tenth-largest oil and gas producer globally and the government will receive revenues of around $150 billion in total tax income.

 This is due to European gas prices, low levels of cost and large government ownership driving the achievement. But for the Nigerian National Petroleum Company (NNPC), it has been unable to pay a kobo into the federation account this year, despite skyrocketing oil prices.