Top exporters and 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. Note that Saudi Arabia accounts for 15.7% of the world’s total crude oil reserve while Russia (RSX) accounts for 6.1% of it. However, there are other reserves in the Arctic Circle, and this could raise Russia’s share in the total crude oil reserve. 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. In addition, Iran and Iraq have break-even costs of $12.6 and $10.6, respectively.
Kuwait has the lowest production cost of ~$8.5, and it takes a break-even cost of $12.3 in the UAE (United Arab Emirates) to produce one barrel of crude. Gazprom PAO (OGZPY), Lukoil (LUKOY), and Tatneft (OAOFY) represent the large-cap Russian ADRs (American depositary receipts) in the oil and gas sector. The chart above 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 United States (SPY) is $36.2. Meanwhile, the cost of producing a barrel of crude oil in Canada stands at $41. Imperial Oil (IMO) and Suncor Energy (SU) are Canada-based integrated oil and gas companies.
In the next part, we’ll analyze how crude oil’s rise in the past impacted investment ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF, also known as XOP.