August 15, 2014 / 2:32 PM / in 6 years

FACTBOX-Oil prices below most OPEC producers' budget needs

By Rowena Caine
    Aug 15 (Reuters) - 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 $100.88 a barrel on Wednesday, the OPEC
Secretariat calculates.
    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.
    By contrast, 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)
 Arctic                                 115-122
 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 Dale Hudson)
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