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Exxon’s oil projects in operation costing less than US$20 per barrel to produce-Rystad Energy
Kaieteur News- While ExxonMobil Guyana Limited (EMGL) has reported that Guyana’s oil projects have a breakeven cost of US$40 per barrel, Rystad Energy in a recent analysis noted that the country’s projects currently producing oil cost less than US$20 per barrel.
Rystad, an independent energy intelligence company said the cost of supply is one of the significant factors that drive the desirability of assets and make them comparable to other sources and regions.
To this end, it was explained, “Helping to transform Guyana into a global heavyweight in offshore production is its competitive breakeven costs, which average $28 per barrel across all projects and less than $20 per barrel for producing projects.”
President of EMGL, Alistair Routledge (Exxon’s oil projects)
Rystad pointed out that Guyana’s offshore oil fields are some of the most competitive supply sources outside of the Middle East and offshore Norway and are cheaper than the US onshore heavyweight the Permian, Russia and many other sources.
“In addition, emissions intensity from offshore activity in Guyana is lower than the global average for oil and gas production and deepwater offshore production, further strengthening the country’s position through the energy transition,” the company stated.
Upstream emissions from Guyana’s deepwater activities average 9 kilograms of CO2 per barrel of oil equivalent (boe), comparable to Brazil and slightly higher than Norway, according to Rystad Energy.
While the energy intelligence company said Guyana’s oil projects in operation have a breakeven cost of less than US$20 per barrel Exxon recently said this cost was just about US$40. This was also repeated by the Ministry of Natural Resources in a statement.
It said, “In July, ExxonMobil Guyana’s Vice President, Phillip Rietema, stated that the company’s operations are secure at a US$40 per barrel break-even price…the US$40 per barrel figure is an average break-even price that applies to several developments offshore, not specifically to Liza 1 and Liza 2,” the MNR statement said.
To this end, the Ministry said the Liza One breakeven cost was US$35 per barrel, while the Liza Two breakeven cost is US$25 per barrel. Notably, the break-even price is the minimum price at which the crude needs to be sold, to cover all the costs of producing it, the MNR said. This includes capital, operating, and other necessary expenses.
A lower breakeven cost relates to higher profits for the oil companies. This means that over reporting on the cost factor to produce could be used as a loophole by oil companies to claw back more revenue for shareholders. Countries therefore have a greater responsibility to monitor such costs to ensure they receive value for money.
(Exxon’s oil projects in operation costing less than US$20 per barrel to produce-Rystad Energy)
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