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Petrostates’ oil and gas revenues will never reach $1B again

Oil&Gas Materials 2 June 2021 16:22 (UTC +04:00)

BAKU, Azerbaijan, June 2

By Leman Zeynalova – Trend:

Petrostates’ oil and gas revenues of states will never reach $1 billion again amid energy transition, Trend reports with reference to Rystad Energy.

The company estimates that the global government income from oil and gas taxation fell to a multi-year low in 2020 of around $560 billion, as production and prices shrunk.

2021 will be the last year global oil and gas taxes will approach the trillion-dollar mark, reaching about $975 billion according to Rystad Energy estimates, assisted by high oil prices. From 2022, taxes will be limited to the low $800 billion range, only ticking up in the early 2030s to about $900 billion, before starting their final and uninterrupted decline to as low as $580 billion in 2040 and about $350 billion in 2050.

“As the energy transition ramps up, countries highly dependent on tax revenue from the upstream industry may have no other option than to diversify their economy to sustain state budgets. This is clearly the rational course for them to follow, but there are inherent challenges in the form of insufficient economic and legal institutions, infrastructure and human capital,“ says Espen Erlingsen, head of upstream research at Rystad Energy.

The earlier the energy transition risks are realized the better they can be addressed. Structural changes will be crucial to stabilize petroleum-reliant economies and avoid geopolitical instability as the global energy systems shift onto a sustainable pathway, Erlingsen adds.

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Follow the author on Twitter: @Lyaman_Zeyn

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