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Oil and gas boost European government revenues

Oilfield Technology,

A recent report by NERA Economic Consulting has found that the oil and gas industry crucially boosts public finances in the EU and Norway. The study, which was commissioned by the International Association of Oil & Gas Producers (OGP), highlights that the industry contributes hundreds of billions of euros to European government revenues.

Roland Festor, OGP’s EU affairs director, commented: “Far from being subsidized, the oil and gas industry is among the largest contributors to government revenues in the energy sector”.

NERA found that the EU28 and Norway receive far greater revenues from oil, gas and coal than these energy sources receive in the form of direct subsidies or other transfers.

Approximately € 480 billion in revenues was collected from oil, gas, coal, wind, and solar energy sources in 2011. Of this, nearly 70%, or just over € 330 billion came from the oil sector. Gas contributed approximately 20% of the revenue, almost € 100 billion. Coal accounted for € 36 billion in revenue, but also received transfers of approximately € 4 billion.

NERA estimate that wind contributed approximately € 8 billion in government revenue, but received transfer equivalent to € 9 billion, implying total net payments to the sector of € 1 billion. Solar power is estimated to have contributed approximately € 2 billion in revenues, but received transfers totaling € 17 billion.

Duties on motor fuels are believed to account for the most government revenue from energy, ahead of VAT. Duties on these fuels amounted to over € 180 billion in 2011, and accounted for approximately 84% of all excise duty revenues from energy.

NERA highlights that VAT on energy also makes a very significant contribution to government revenues. A large share of VAT is paid on oil through motor vehicle fuels.

After excise duty and VAT, revenues collected from the upstream oil and gas sector also contribute substantially to government revenues, accounting for € 83 billion in total.

Adapted from a report by Emma McAleavey.

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