Guyana’s oil at world class low breakeven price of $35/barrel – Hess

… Projected to fall further

(Feb 25, 2020  News)  Hess Corporation has revealed that the current breakeven price for Guyana’s oil is US$35 per barrel Brent, among the lowest in the world. This was revealed by the Chief Executive Officer, John Hess. (photo at right)

For those unaware, the breakeven price is the price at which the oil must be sold to cover the cost to produce it. Every additional dollar on the barrel would be the profit.

Kaieteur News had revealed in December that Guyana’s crude will be priced against North Sea Brent crude, a competitive set of crudes extracted from fields in the North Sea.           

In a recent press statement, Totaltec Oilfield Services lauded the revelation of Liza crude’s current breakeven price by Hess, and its implications for the profitability of the oil, currently being produced by ExxonMobil.

It stated “Breakeven points provide an objective basis for comparison of global oil fields, and impact on field development decisions and reserves estimates. Guyana ranks towards the lower end of the global scale, where the lowest breakeven points are found in the Middle East (approx. $27 USD /bl Brent) and the highest in the Arctic (approx. $75 USD /bl Brent). Considering the Stabroek block is in deepwater offshore, the breakeven costs are amongst the lowest in the world.”

Attached is a table used by Totaltec showing 2015 breakeven costs for different oilfields around the world.
“The costs in the table shown are from 2015, and do not take into consideration the significant downturn in the industry that began mid 2014.”

CEO of Totaltec, Lars Mangal stated “The breakeven cost as estimated by Hess, places Guyana in a very competitive position on the global market, making the other offshore blocks attractive as an investment opportunity. This is year one for Guyana as an oil exporter, and we begin in a highly competitive position relative to other established players.”

Hess also reportedly stated that the breakeven price for Guyana’s oil is not just low, but that it is projected to fall even lower.
Mangal said that this is “an indication of positive economics for the Stabroek block, and for Guyana as a country.”

Hess had revealed earlier this year that it had yet again revised downward the development cost for the Liza-1 project, taking the total revision from the first estimate to US$900M. First set to cost US$4.4B, the cost is now estimated to be US$3.5B.

ExxonMobil’s production in the Liza field is expected to be accompanied in 2022 by a second Floating Production Storage and Offloading (FPSO) vessel. That will take production to a peak of 340,000 barrels per day.

If the third field development plan, Payara, is approved, it would, according to ExxonMobil, come on stream in 2023, taking production to a peak of 560,000 barrels per day.

ExxonMobil is the operator of the Stabroek Block with a 45 percent working interest, while Hess has a 30 percent stake, and CNOOC has a 25 percent stake.

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Comments

  • kamtanblog  On February 25, 2020 at 7:01 am

    Surprise …surprise !
    Oil companies are “profit” motivated.
    Their greed in satiable !
    They should not be allowed to “self regulated”
    The Guyana government has to regulate
    both “production and profit’ !
    No ifs or buts

    It’s not rocket science

    Kamtan

  • wally n  On February 25, 2020 at 11:55 am

    They should not be allowed to “self regulated”
    The Guyana government has to regulate
    both “production and profit’
    REALLY? HOW? WAITING…..WAITING…

    • kamtanblog  On February 25, 2020 at 12:00 pm

      By debating in parliament and passing
      /enforcing laws to address the issues.
      Where there is a will
      There is a way

  • brandli62  On February 25, 2020 at 3:05 pm

    The good news in the report is the fact that the production costs for Guyanese offshore oil is with USD 35.– per barrel among the lowest in the world. Just compare this to US Shale, which is at USD 65.–. The low costs mean that the recovery of the oil field development costs will be reached earlier. Hence, the Guyanese government will benefit earlier than anticipated with a larger share of the oil revenues. This is indeed good news.

  • Jim  On February 25, 2020 at 10:41 pm

    Not bad. $35 is cheap considering that the oil is extra sweet, light and doesn’t have as much sulfur or sticky tar.

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