|Marginal cost of oil production|
|Written by Tony Rogers|
|Thursday, 28 May 2009 00:00|
What is the marginal cost of oil production?
The marginal cost of oil production is the point below which it becomes uneconomic to bring new oil projects to market. Above the marginal cost of production, product (in this instance oil) can be extracted and sold at a price that will return to investors an acceptable after tax capital return adjusted for risk.
Using 2007 data, the leading US Investment Bank Goldman Sachs in a late September 2008 report pegs the marginal cost of production for the oil industry at US$80-85 per barrel (/bbl). They also point out that forecasting for the 2009 year, the number is likely to be $85-90/bbl given cost inflation data observed thus far in 2008.
|Last Updated on Tuesday, 09 June 2009 08:04|