A new report from the International Energy Forum (IEF) and S&P Commodity Insights revealed that despite rising production costs, most new oil supplies can be produced at under US$60/bbl Brent. The “Upstream Oil and Gas Investment Outlook” report highlighted that this breakeven price is US$10/bbl higher than in 2021.
Among the lowest-cost producers, Guyana stands out with an average breakeven price of US$36/bbl Brent. The Middle East leads with US$30/bbl, while new wells in the U.S. require about US$57/bbl.
According to the report, heavy crudes in Canada and Venezuela sit at the highest end of the cost curve.
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“Globally, the supply stack remains relatively flat, with most supplies expected to breakeven between US$50/bbl and US$60/bbl. Both conventional and tight oil projects, including higher-cost ones, will be necessary to meet demand and offset base declines over the next 10-15 years,” the report outlined.
Oil production in Guyana is led by ExxonMobil. It currently has three projects running, Liza 1 and 2, and Payara. Two other projects, Yellowtail and Uaru, will be online by 2026. These projects have industry-leading breakevens in the range of US$25-35 per barrel Brent, according to Exxon’s Stabroek Block partner, Hess.
Yellowtail is expected to deliver the second lowest breakeven for Exxon.
The breakeven for the 250,000 b/d Yellowtail development is pegged at US$29/bbl Brent. In comparison, Liza Phase 1 is US$35/bbl, Liza Phase 2 is US$25/bbl and Payara is US$32/bbl.
Low breakeven prices have made the Guyana basin one of the most competitive for exploration and production.
