Top producers’ break-even cost
According to data compiled by Rystad Energy, the cost of production per barrel of crude oil is $17.2 in Russia—compared to $9.9 in Saudi Arabia. It’s important to note that Saudi Arabia accounts for 15.7% of the world’s total crude oil reserve. Russia (RSX) accounts for 6.1% of the world’s total crude oil reserve. However, there are other reserves in the Arctic Circle. This could raise Russia’s share in the total crude oil reserves. Also, Venezuela accounted for 17.5% of the world’s total proven crude oil reserve in 2014. According to a study by BP (BP), Venezuela’s break-even cost is ~$23.5. Also, Iran and Iraq have break-even costs of $12.6 and $10.6, respectively.
Kuwait has the lowest production cost of ~$8.5. It takes a break-even cost of $12.3 in the UAE (United Arab Emirates) to produce one barrel of crude. The above chart shows the break-even cost for different countries. Please note that these shouldn’t be confused with fiscal break-even prices.
Break-even cost for other countries
The data suggest that the cost to produce a barrel of crude oil in the US (SPY) is $36.2. Meanwhile, the cost to produce a barrel of crude oil in Canada is $41. Imperial Oil (IMO) and Suncor Energy (SU) are Canada-based integrated oil and gas companies. Brazil’s break-even cost is ~$48.8 per barrel. Petrobras (PBR) represents the large-cap Brazilian ADRs (American depositary receipts) in the oil and gas sector. ExxonMobil (XOM), Chevron (CVX), and Occidental Petroleum (OXY) represent large-cap US-based integrated energy companies.
In the next part, we’ll analyze how the geopolitical tensions increased in recent years.