Survey of Oil Exports from the Middle East

With all of the current strife in the Middle East and North Africa hitting the main stream media, I thought it would be interesting to examine the petroleum export trends for the countries in these regions.

My hypothesis is that as the exports for oil exporting countries go into decline, this stress on the economy will increase the likelihood of civil unrest and political upheaval.  Especially those countries which are heavily dependent upon petroleum exports for revenue will suffer sever economic contractions as export revenues decline and then ceases altogether.  These ex-exporters will then either have to decrease their domestic consumption or start importing petroleum.  The transition from exporter to importer would not be easy, and cutting consumption, to maintain exports, would not go over very well, politically either.   With little other revenue sources, declining rates of petroleum exports are a formula for civil unrest and regime change.

Other factors being equal, I would expect that the greatest potential for civil unrest would be in those countries with present high standard-of-living (e.g., GDP per capita) and which are at or headed towards net zero exports.  Of course, all the other factors are usually not equal, and so I considered a few other factors as well.  Population growth, in particular, looks quite troubling for these regions.

In this article, I survey the fourteen countries of the Middle East.  This is actually part of a larger on-going study that I am conducting to quantitatively examine global oil production, consumption and export trends. 

Data Sources

All production, consumption and export rate are reported in units of billions of barrels per year (bbs/yr).  I used this to calculate net exports (or imports) as production minus domestic consumption. The petroleum production and consumption data I gathered from both the EIA Energy Profiles and BP Statistical Review.   Population data, plotted on the right axis in units of millions, was extracted from the US Census Bureau International Database, as were 2010 estimates of the growth rates.  GDP per capita (purchasing power parity corrected) and public debt, as a percentage of GDP, are as reported in the CIA World Fact Book entry for each country. Predominant religions are as reported in Religion Facts, or, in the CIA World Fact Book.

When reported in the CIA fact book or EIA country analysis brief, I also present the destinations of the oil exported by the countries being considered and the proportion of federal income or GDP that is dependent on the petroleum industry.  Unfortunately, this information is not consistently presented for every exporting country.

Both of the EIA Energy Profile and BP Statistical Review data bases have their flaws, if one’s goal is to examine long term production and consumption trends on a country-by-country basis.

The BP statistical review nicely shows data back to 1965, but, only shows data for about the top 40 highest consuming or producing countries, which are not necessarily the same countries.  Lower consumption or production countries get lumped together within a geographic region. 

The EIA nicely shows both consumption and production data separately for nearly every country in the world, but, this data is only presented from 1980 on, and so longer term trends can be difficult to see.

Generally, the BP and EIA data are in good agreement—one exception being when a country, like Brazil, has significant “other liquids” production (i.e., ethanol) which the BP data does not include. However, that is not the case for the present countries.

Okay, enough ranting about data bases, without further adieu, here’s my survey and assessment of the recent petroleum export trends (the big green arrow in the figure for those who will not read).

Survey of the Middle Eastern Countries

Bahrain

Religion: 100% Muslim (70% Shi'a, 30% Sunni)

Population: 1.1 million; growth rate 3%

CIA:

GDP per Capita: $40,400 (2010 est.)

Public Debt: 59.2% of GDP (2010 est.)

Petroleum production and refining account for more than 60% of Bahrain's export receipts, 70% of government revenues, and 11% of GDP (exclusive of allied industries).

EIA:

no report

Recent Petroleum Export Trend: Hitting net-zero exports now (production declining; consumption rapidly increasing).

Iran

Religion: 98% Muslim (89% Shi'a, 9% Sunni)

Population: 77 million; growth rate 1.3%

CIA:

GDP per Capita: $11,200 (2010 est.)

Public Debt: 16.2% of GDP (2010 est.)

Population below poverty line: 18% (2007 est.)

EIA:

Oil accounts for 44% of total energy consumption; Nat gas is 53%

Oil exports provide approximately half of Iran’s government revenues, while crude oil and its derivatives account for nearly 80% of Iran’s total exports.

Iran is OPEC’s second-largest producer and exporter after Saudi Arabia

Top petroleum export destinations (2008): Japan, China, India, S Korea (60% of total); Italy, Spain, Greece, France, (19% of total)

Recent Petroleum Export Trend: Flat (production and consumption both increasing at about the same rate)

Iraq

Religion: 97% Muslim (60% Shi'a, 37% Sunni)

Population: 30 million; growth rate 2.4%

CIA:

GDP per Capita: $3,600 (2010 est.)

Public Debt: no data

Population below poverty line: 25% (2008 est.)

The oil sector provides over 90% of government revenue and 80% of foreign exchange earnings.

EIA:

Oil accounts for 96% of total energy consumption; Nat gas is 4%

Top petroleum export destinations: Asia (47% of total); Europe (22% of total); Western Hemisphere (30%)

Recent Petroleum Export Trend: Increasing (production increasing faster than increasing consumption).

Israel

Religion: 14.6% Muslim (mostly Sunni), 80% Jewish, 2% Christian

Population: 7.3million; growth rate 1.6%

CIA:

GDP per Capita: $29,500 (2010 est.)

Public Debt: 77.3% of GDP (2010 est.)

Population below poverty line: 24%

EIA:

no report

Recent Petroleum Import Trend: declining (no production; declining consumption)

Israel has almost no domestic oil production and imports substantially all of its petroleum.

Jordan

Religion: 92% Sunni Muslim, 6% Orthodox

Population: 6.2 million; growth rate 2.2%

CIA:

GDP per Capita: $5,300 (2010 est.)

Public Debt: 61.4% of GDP (2010 est.)

Population below poverty line: 14.2% (2002)

EIA:

no report

Recent Petroleum Import Trend: declining (no production; declining consumption)

Jordan has no domestic oil production and imports substantially all of its petroleum.

Kuwait

Religion: 85% Muslim (70% Sunni, 30 Shi'a), 15% Christian, Hindu, Parsi, other

Population: 2.5 million; growth rate 2.1%

Concerning the drop in 1991, from Population of Kuwait:

In 1985, the population reached 1.697.301 persons, comprised 56% males and 44% females. In 1990, the population reached 2.141.465 persons. The percentage of non-Kuwaitis scored 72%. In same year, the Iraqi aggression against Kuwait occurred. As a result, large number of the non-Kuwaitis emigrated. Hence, major changes in the population structure took place.

CIA:

GDP per Capita: $51,700 (2010 est.)

Public Debt: 12.6% of GDP (2010 est.)

Population below poverty line: no data

Petroleum accounts for nearly half of GDP, 95% of export revenues, and 95% of government income.

EIA:

Kuwait's economy is heavily dependent on oil export revenues which account for roughly 90 percent of total export earnings.

Top petroleum export destinations: Japan, S Korea, India, Taiwan, Singapore, China (64% of total); USA (8.7% of total); Western Europe (7.5%)

Recent Petroleum Export Trend: Flat (production and consumption both increasing at about the same rate).

Lebanon

Religion: 60% Muslim, 39% Christian

Population: 4.1million; growth rate 0.6%

CIA:

GDP per Capita: $14,200 (2010 est.)

Public Debt: 150.7% of GDP (2010 est.)

Population below poverty line: 28% (1999 est.)

EIA:

no report

Recent Petroleum Import Trend: flat (no production; flat consumption)

Lebanon has no domestic oil production and imports substantially all of its petroleum.

Oman

Religion: Ibadhi Muslim 75%, 25% other (includes Sunni Muslim, Shia Muslim, Hindu)

Population: 3 million; growth rate 2%

CIA:

GDP per Capita: $25,800 (2010 est.)

Public Debt: 4.4% of GDP (2010 est.)

Population below poverty line: no data

Oman is a middle-income economy that is heavily dependent on dwindling oil resources. By using enhanced oil recovery techniques, Oman succeeded in increasing oil production, giving the country more time to diversify.

EIA:

Though Oman is a significant net exporter of petroleum, they are not a member of OPEC. As is the case with other exports from the Gulf, Asia provides the main consumer markets for Omani crude, led by China and Japan.

Exports of natural gas have diversified the economy away from oil, but Oman will remain highly dependent on its hydrocarbon sectors for the foreseeable future. Oman is pursuing economic diversification, however its industrialization program is itself reliant upon increased volumes of petroleum and natural gas as feedstock.

Recent Petroleum Export Trend: Flat (production and consumption both increasing).

Palestine

(data from Palestinian Territories Fact Sheet)

Religion: The West Bank is 75% Muslim (predominantly Sunni), 17% Jewish, and 8% Christian and other. The Gaza Strip is 98.7% Muslim (predominantly Sunni), 0.7% Christian, and 0.6% Jewish.

Population: 4 million; growth rate 3.6% (based on the statement that the population will double in 20 yrs)

GDP per Capita: $3,000 (based on a GDP of $12 billion)

Population below poverty line: 46%

CIA:

no report

EIA:

no report

Recent Petroleum Import Trend: increasing (no production; increasing consumption) Palestine has no domestic oil production and imports substantially all of its petroleum.

Qatar

Religion: Muslim 77.5%, Christian 8.5%, other 14% (2004 census)

Population: 840,000; growth rate 0.9%

CIA:

GDP per Capita: $145,300 (2010 est.)

Public Debt: 10.3% of GDP (2010 est.)

Population below poverty line: no data

EIA:

Oil accounts for 25% of total energy consumption; Nat gas is 75%

Though Qatar’s petroleum production has grown steadily since 2002, Qatar’s fields are maturing, and output at Dukhan – formerly the largest producing field – is in decline. To offset anticipated declines, enhanced oil recovery (EOR) techniques are being considered for several fields.

The vast majority of Qatar’s oil exports are sent to Asian economies. Japan is the single largest importer, though South Korea is also an important export market.

Recent Petroleum Export Trend: Increasing (production increasing faster than increasing consumption).

Saudi Arabia

Religion: Muslim 100%

Population: 26 million; growth rate 1.5%

CIA:

GDP per Capita: $24,200 (2010 est.)

Public Debt: 16.7% of GDP (2010 est.)

Population below poverty line: no data

The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings

EIA:

Oil accounts for 56% of total energy consumption; Nat gas is 44%

Saudi Arabia exported an estimated 7.3 mbd of petroleum liquids in 2009 (7.5 mbd in 2010), the majority of which was crude oil. Asia now receives an estimated 55 percent of Saudi Arabia's crude oil exports, as well as the majority of its refined petroleum product and natural gas liquids (NGL) exports.

Top petroleum export destinations: Far East (57% of total); USA (14% of total); Europe/Mediterranean (9%)

Recent Petroleum Export Trend: Flat to declining (production flat; consumption increasing).

Syria

Religion: 74% Sunni Muslim, 16% other Muslim sects, 10% Christian

Population: 22 million; growth rate 2%

CIA:

GDP per Capita: $4,800 (2010 est.)

Public Debt: 29.8% of GDP (2010 est.)

Population below poverty line: 11.9% (2006 est.)

Long-run economic constraints include declining oil production, high unemployment, rising budget deficits, and increasing pressure on water supplies caused by heavy use in agriculture, rapid population growth, industrial expansion, and water pollution.

EIA:

Oil production has stabilized after falling for a number of years, and is poised to turn around as new fields come on line. While much of its oil is exported to Europe, Syria's natural gas is used in reinjection for enhanced oil recovery (EOR) and for domestic electricity generation. Syrian crude oil exports go mostly to OECD European countries, in particular Germany, Italy, and France, totaling an estimated 143,000 bbl/d in 2009, according to International Energy Agency (IEA) data.

Recent Petroleum Export Trend: Declining (production declining; consumption increasing).

Unite Arab Emirates

Religion: 96% Muslim (16% Shi'a),

Population: 5.1 million; growth rate 3.6%

CIA:

GDP per Capita: $40,200 (2010 est.)

Public Debt: 44.6% of GDP (2010 est.)

Population below poverty line: 19.5% (2003)

Dependence on oil, a large expatriate workforce, and growing inflation pressures are significant long-term challenges.

EIA:

The UAE has been able to maintain its proven reserves over the last decade primarily due to enhanced oil recovery (EOR) technologies increasing extraction rates of mature oil projects combined with higher oil prices making more reserves commercially viable.

In 2009, the UAE exported 2.3 mbd, predominantly to Asian markets. Japan is the main market for UAE petroleum exports, encompassing 40 percent of its export volumes. South Korea and Thailand are the other major destinations for Emirati crude.

Recent Petroleum Export Trend: Flat (both production and consumption increasing).

Yemen

Religion: Muslim including Shaf'i (Sunni) and Zaydi (Shia), small numbers of Jewish, Christian, and Hindu

Population: 23 million; growth rate 2.7%

CIA:

GDP per Capita: $2,600 (2010 est.)

Public Debt: 39.1% of GDP (2010 est.)

Population below poverty line: 45.2% (2003)

Yemen is a low income country that is highly dependent on declining oil resources for revenue. Petroleum accounts for roughly 25% of GDP and 70% of government revenue.

EIA:

Yemen's economy is heavily dependent on hydrocarbons, which account for 30 percent of GDP, nearly 75 percent of government revenues, and over 90 percent of foreign exchange earnings.

Production has been declining steadily since reaching a peak of 440,000 bbl/d in 2001. EIA estimates oil output will decrease further to 250,000 bbl/d in 2011 and 2012.

As domestic oil consumption rises, net exports are falling along with production. Net oil exports were 150,700 bbl/d in 2008. Yemen's net imports of refined oil products in 2007, the most recent data available, were estimated at 43,000 bbl/d, mainly distillate and residual oils. Asian countries account for the majority of Yemen's oil exports.

Recent Petroleum Export Trend: Declining (production declining and consumption increasing).

Summary and Conclusions

Well even if you just looked at the pictures you might have the same over reaction as I do which is: does anything look good here?  No, not really, but some countries certainly look much worse than others and are currently in the throes of dealing with declining exports, while other look like declines are about to start.  Only a few actually have increasing exports, but the rapid population growth in the countries will mitigate the increase in exports as domestic consumption increases. 

Of these fourteen countries, four are importers: Israel, Jordan, Lebanon, and Palestine.  None of these countries have any significant domestic production and they have to import essentially all of their petroleum. Israel, Jordan, Lebanon (and probably also Palestine) have significant population growth ranging from 1.6% , 2.2% and 3.6% for Israel, Jordan and Palestine, respectively. Only Lebanon at 0.6% has a modest growth rate.  The percentage of public debt to GDP is very large range from 61%, 77% and 151% for Jordan, Israel and Lebanon.  A tightening supply of petroleum with rising prices will damage the economies of these countries.

About to join the ranks of importer for this region is Bahrain, which is hitting zero net exports now.  With 70% of government revenues dependent on production and refining it is not hard to see how this country will suffer economic hardship in the very near future.  With high standard of living at $40k/p), the population has recently spiked upwards (a 3%/yr growth rate), as has petroleum consumption.  This looks like a prime candidate for civil unrest as Bahrain transitions into an importer. 

Not far behind Bahrain are Syria and Yemen whose exports are rapidly declining.  If their downward trends in exports continue at the same pace it looks like they would hit net zero exports in the 2010s.  Both countries are highly dependent on declining oil resources for revenue.  Like Bahrain, the population of Syria and Yemen are rapidly escalating (2% and 2.7% growth rates, respectively).  Unlike Bahrain, however, the standard of living of Syria and Yemen are already much lower ($4.8/yr and $2.6/yr, respectively), and so the fall will not be as great.  However, with 45.2% of the population below the poverty line, there is really is no where to fall further to.  I put Syria and Yemen high on the list a candidate countries for civil unrest.

Neither Syria nor Yemen are large exporters (each about 0.12 mbd) so declining exports from these countries wouldn’t have much effect on the global supplies of oil.  The largest effect would be on the top export destinations: Germany, Italy, and France, and, Asia.  Perhaps, as suggested by the EIA, production in Syria will turn around production.  However in remains to be seen if any increase in production will actual outpace consumption which is also on an upward trend. 

Not too far behind Syria and Yemen, is Oman which has recently staved off a down trend in exports by introducing enhanced oil recovery techniques.  This might be doing little more than accelerating production from diminishing reserves of oil, which in turn, will cause an even steeper production declines a few years out.  For now, however its exports could stay flat, or increase slightly, if production can keep ahead of increasing domestic consumption.

The Kingdom of Saudi Arabia also is showing signs of declining exports.  Perhaps, like Oman, enhanced oil recovery techniques may allow Saudi Arabia to maintain its production at constant levels.  However, increasing population (1.5% growth rate) and increasing petroleum consumption trends will probably mean continued declines in exports.  As I discussed previously, even if production stayed constant, the increasing trend in domestic consumption would cause net exports to go to zero by about 2044.   For the time being however I would not expect petroleum exports to be a factor driving civil unrest.

Iran, Kuwait, and UAE all have flat exports. Apparently, UAE is maintaining its production with enhanced oil recovery techniques, and so I have the same concern as with Oman that this will very steep production declines eventually.  Population growth in UAE looks ridiculously high (3.6%/yr), and I expect that this will eventually cause consumption to spike upwards.    Population growth in Iran (1.3%/yr) and Kuwait (2.1%/yr) is not as steep as UAE, but I expect that is will continue to driven up the rate of domestic consumption and cut into exports.  Like Saudi Arabia, however, export revenues from petroleum exports should be stable and therefore would not be a factor driving civil unrest.

Iraq and Qatar are the only two counties with upwards trends in petroleum exports.  For both countries this is due to increased production rate out pacing increasing domestic consumption rates.  As I discussed previously, Iraq is thought to have the potential for a huge increase in production rates, but it remains to be seen if foreign investors and private companies with the know-how will invest in Iraq to make this a reality.  Qatar, on the other hand, may be turning to enhanced oil recovery techniques just to keep production rates increasing. 

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Next time:  survey of oil exports from North Africa