Rystad Energy: Average breakeven price for new oil projects dropped 8%

The average breakeven price for new oil projects in the world has dropped to around $47 per barrel, according to Rystad Energy analysts, Report informs referring to Prime agency.

“The average breakeven price for new oil projects has dropped to around $47 per barrel – down around 8% over the past year and 40% since 2014, with offshore deepwater remaining one of the least expensive sources of new supply,” Rystad Energy said.

“Back in 2014, Rystad Energy estimated the average breakeven price for tight oil to be $82 per barrel and the potential supply in 2025 to be 12 million bpd. Since then, the breakeven price has come down while the potential supply has increased. In 2018, we estimated an average breakeven price for tight oil of $47 per barrel and potential supply of 22 million bpd. The breakeven price for tight oil has continued to fall, reaching a current average of $37 per barrel,” the analysts noted.

“Our cost of supply curve for liquids indicates that back in 2014, an oil price of close to $100 per barrel was required to produce 100 million barrels per day (bpd) in 2030. By 2018, the required oil price was closer to $55 per barrel, and in 2020, it dropped to $45 per barrel. Our latest estimate remains unchanged this year at $45 per barrel for 100 million bpd of production in 2030,” reads the report.

“We maintain the required oil price to produce 100 million bpd in 2030 unchanged, despite the declining average breakeven price of new oil projects, because the potential supply for 2030 has decreased since last year due to delays in sanctioning activity and conservative shale producers,” Rystad Energy noted.

“In 2014, we estimated that the total 2030 liquid potential was 104 million bpd, while in 2018, this jumped considerably to 135 million bpd mainly driven by increased potential volumes from North American tight oil. However, low activity levels in 2020 and 2021, due to the Covid-19 pandemic and a general focus on the energy transition, led to a downward adjustment in the overall liquid potential. In 2020, the potential 2030 supply was revised down to about 116 million bpd, and in 2021 we revised it further to about 113 million bpd,” the analysts said.