The cost of oil production in Russia is close to us

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Себестоимость добычи нефти в РФ близка к американской

The cost of oil production in Russia is one of the highest in the world. Such is the conclusion made in the report on the results of a study conducted by firm IHS, Markit, an industry consultant Saudi Saudi Aramco.

The study calculated the so-called break-even oil price (breakeven costs), that is, one in which production at the project is a valid cost-effective. The main evaluation criteria was four. First – the cost was calculated for a “typical” new oil projects of the country, initiated in 2019.

Second – the price should cover all production costs of the company with the full cycle of field development. Third – the cost includes taxes. And the fourth of the costs of the project are taken into account and 2030, the profitability of production should be 10% per year (industry standard).

Based on all these criteria, IHS, Markit estimated the average break-even oil price for new Russian projects on land of $ 42 per barrel for Brent. For projects offshore production — about 44 dollars.

More expensive, than in Russia, oil production in Kazakhstan (46 per barrel on land projects and 51 – on-sea), land projects in the USA ($49), Angola and Thailand (about $ 50 on the shelf), in Azerbaijan, India and China (55-60 dollars per barrel). By the way, the American projects in the Gulf of Mexico was cheaper projects on the Russian shelf – about $ 40 per barrel.

But the lowest cost of production in Saudi Arabia, which is not surprising, because the report is intended to demonstrate to the IPO that Saudi Aramco is the most profitable oil company in the world. The breakeven price for land and offshore fields in the Kingdom is estimated at about 16-18 dollars per barrel.

In Iraq, the production costs of USD 20 per barrel in Iran to $ 22, UAE — 20 and $ 30 for land and marine projects, respectively. In Nigeria, the production on land worth 28 dollars per barrel, 36 in Venezuela, dollars, and shelf production in the British sector of the North sea is less than 40 dollars per barrel.

By the way, the evaluation of Saudi Aramco are close to the rating of the Russian government, but a little high, RBC says a source close to the Cabinet. According to him, the most expensive new fields are in the Arctic and the far East, taking into account the existing benefits the cost of development is estimated at 50-55 dollars per barrel.

In General, in Russia the main share of the total cost of oil is tax. Deputy Minister of energy Pavel Sorokin in February 2019 said in an interview with “Vedomosti” that the cost of a barrel of Russian oil today is $ 25 and less, “everything else — taxes.”

“The country is gradually moving to the development of less expensive stocks. This means that the cost will rise and the tax system that needs to adapt. If yesterday and today $ 25 per barrel was enough to develop, for the development of stocks tomorrow at a price oil below $ 60 to $ 70 this is not enough,” said Sorokin.

According to Rosstat, the total cost of Russian oil (at current prices, without VAT, excises and similar mandatory payments) in the II quarter of 2019 made 2508 RUB per barrel, or 31.9 dollars at the average exchange rate of the quarter.

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