Rystad Energy has reported a continued rise in the cost of developing new upstream oil projects, driven by inflation and supply chain issues. The latest research shows that the average breakeven cost for non-OPEC oil projects has climbed to US$47 per barrel of Brent crude, a 5% increase in just one year. Despite this, breakeven prices remain below current oil prices.
According to Rystad Energy, offshore deepwater and tight oil projects remain the most cost-effective sources of new supply, while oil sands are the priciest.
Exxon’s gas wells take spotlight in global upstream activity for August – Rystad Energy | OilNOW
The report projects more oil supply by 2030, primarily from low-cost OPEC production, estimating that an equilibrium price of US$55 per barrel will meet the 2030 demand of 105 million barrels per day.
“Rising breakeven prices reflect the increasing cost pressures on the upstream industry,” said Espen Erlingsen, head of upstream research at Rystad Energy. “This challenges the economic feasibility of some new projects, but certain segments, including offshore and tight oil, continue to offer competitive costs, ensuring supply can still be brought online to meet future demand.”
S&P ranks Guyana top upstream investment destination among Atlantic Margin basins | OilNOW
The study further analyzes global cost-of-supply data, highlighting onshore production in the Middle East as the cheapest new oil source, with a breakeven of US$27 per barrel.
Offshore shelf projects average US$37 per barrel, offshore deepwater US$43, and North American shale US$45. In contrast, oil sands breakeven prices average US$57 per barrel, with some projects as high as US$75.
