By Rowena Caine
Sept 8 Oil prices are now too low for most OPEC
countries to cover their spending needs, a Reuters survey shows.
Although the cost of getting oil out of the ground is low in
most countries in the cartel, growing social spending and
ambitious infrastructure plans mean many oil producers now earn
less from their oil sales than they need to fund their budgets.
The weighted average of oil prices collected by members of
the Organization of the Petroleum Exporting Countries was $106 a
barrel last year - just enough to cover the average budget
requirements of the group, according to figures compiled by one
team of analysts, who declined to be identified.
But oil prices are falling, and the OPEC crude oil basket
price was just $98.36 a barrel on Friday, the OPEC Secretariat
Seven of the 12 OPEC members, including Iraq, Iran and
Nigeria, now need far higher oil prices to cover their budgets,
data from economists and industry analysts shows.
Iran's oil price needs rose 11 percent last year due to U.S.
and EU sanctions, while the average break-even price for Iraq
rose 16 percent, the figures show.
Nigeria's oil price needs have also risen sharply thanks to
the increasing cost of deepwater offshore projects, which the
International Energy Agency says have attracted oil companies
wishing to avoid the country's domestic turbulence.
Average selling prices for oil covered the budgets of five
key OPEC members, most of which are located in the Gulf: Saudi
Arabia, the United Arab Emirates, Qatar, Kuwait and Angola.
Analysts at French bank Natixis expect Kuwait and the UAE to
find it easiest to meet their budget needs thanks to high levels
of oil production and exports relative to their populations.
The budget needs of oil producers are generally much higher
than their marginal operating costs, calculated as the cost of
producing one extra barrel of crude oil from an existing field.
In the mature oilfields of the UK North Sea, where the
remaining oil is difficult to access, marginal output costs were
around $46-$53 a barrel last year, industry data shows.
One industry analyst estimated the total marginal extraction
cost of ultra-high pressure/high temperature (uHPHT) oilfields
ranged from $95 to $110 per barrel based on British tax rules in
place until this year.
However, recent changes to UK tax including new tax breaks
would bring those costs down to $85 to $95 per barrel.
The following average estimates are from a Reuters survey of
nine oil consultancies, banks and independent analysts:
Oil prices needed to meet expenditure
OPEC Country 2012 2013
Algeria 121 119
Angola 81 94
Ecuador 112 122
Iran 123 136
Iraq 100 116
Kuwait 61 59
Libya 94 111
Nigeria 118 124
Qatar 59 58
Saudi Arabia 87 92
UAE 82 90
Venezuela 102 117
Marginal cost of producing one new barrel of oil
Regions Dollars per barrel ($/bbl)
Brazil Ethanol 63-69
Central and South America 29-35
Deepwater Offshore 54-60
EU Biodiesel 106-113
EU Ethanol 98-105
Middle East Onshore 10-17
North Sea 46-53
Oil Sands 89-96
Former Soviet Union Onshore 18-25
Russia Onshore 15-21
US Ethanol 80-87
US Shale Oil 70-77
WAF Offshore 38-44
(Reporting by Rowena Caine in London; Editing by Christopher
Johnson and Michael Urquhart)