Trends in Real Costs of Crude Oil Production: The Middle East vs its Competitors

Abstract

“Costs” reflect all exploration and development outlays and include a 15% real rate of return. Costs in itself is generally not a barrier to new developments in OPEC countries. Costs are notably higher for most non-OPEC countries where they do inhibit developments. Mexico and Russia are potentially low cost producers. In the North Seas the cost-price squeeze is crucial. Low prices have forestalled net increases in new non-OPEC production.