Goldman’s analysts, long-time oil bulls, are now expecting a “flatter oil price environment” in the next few years. In other words, they think prices in 2013 and 2014 will be “marginally” lower than current spot levels, and drift down to $85 by 2016.
Bernstein’s energy analysts have looked at the upstream costs for the 50 biggest listed oil producers and found that — surprise, surprise — “the era of cheap oil is over”:
Tracking data from the 50 largest listed oil and gas producing companies globally (ex FSU) indicates that cash, production and unit costs in 2011 grew at a rate significantly faster than the 10 year average. Last year production costs increased 26% y-o-y, while the unit cost of production increased by 21% y-o-y to US$35.88/bbl. This is significantly higher than the longer term cost growth rates, highlighting continued cost pressures faced by the E&P industry as the incremental barrel continues to become more expensive to produce. The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth. Assuming another double digit increase this year, marginal costs for the 50 largest oil and gas producers could reach close to US$100/bbl. Read more
Ali Naimi, Saudi Arabia’s powerful oil minister, has insisted the kingdom will be able to make up for any disruptions to global oil supplies amid mounting tensions over the European embargo on Iran’s oil exports, the FT reports. r Naimi said Saudi Arabia’s ongoing investment in oil production capacity meant it was “able to respond to shortages around the world”. Without naming Iran, he told an audience in London that Saudi Arabia would continue to be a “reliable, steady and dependable supplier of energy to the world”. He cited the example of Libya last year, when the kingdom significantly ramped up oil output to make up for the volumes lost during the north African country’s civil war. His comments came as Iran ramped up its criticism of the Saudis, with a senior Iranian official describing the Saudi royal family as “tyrant rulers”.
Opec is indeed in consultations about increasing oil production in response to disrupted supplies in Libya, according to Kuwait’s oil minister on Tuesday, Reuters reports. The FT reported a behind-the-scenes move by Kuwait, the United Arab Emirates and Nigeria towards increasing production in early April. While Saudi Arabia has responded quickly by pumping more oil and some members are now quietly following, others including Iran and Algeria oppose an increase and see no shortage of in the market. Industry officials said that Kuwait, the UAE and Nigeria were to ramp up their production by as much as 300,000 barrels a day in coming weeks. Riyadh has raised its output by about 700,000 b/d.
It’s not just about finding enough quality crude to replace Libya — it’s about the not insubstantial political risks hanging over those supplies, too.
Fighting in Libya worsened on Wednesday, as rebels counter-attacked an offensive by Gaddafi forces into the country’s east — which is where much of the oil production is (was), incidentally. Read more
Hitting the wires at pixel time — an astonishing promise:
RIYADH, Feb 24 (Reuters) – Saudi Arabia is willing and able to supply high quality, light oil to replace any lost Libyan crude, senior Saudi sources said on Thursday. Read more
Apart from the prospect of $220 a barrel…
Much discussion on Wednesday of whether Opec could pump more oil from the Arabian peninsula to make up for Libya going offline — so we thought these pointers from Barclays Capital’s Amrita Sen might help: Read more