The cost of oil production in Russia and the world

The Cost of oil production in Russia is of vital importance for the economy of the country. The state budget is filled by hydrocarbons. The difference between the cost and the market price determines the profits of the oil exporters. At first glance, the calculation of the total cost of production of black gold seems a simple task. But the question of the cost of oil production in Russia does not find a clear answer. The difficulty is this: to substantiate what costs should be included in this amount.

Pricing

Usually, the price of oil implied quotes for the relevant futures contracts. In the course of trading on major world markets is the price of black gold, which serves as a benchmark for all sellers and buyers of hydrocarbons. The unit of measure for this item is the barrel (158 litres).

The Quality of the oil varies depending on Deposit where it is mined. Different varieties are distinguished by density and sulfur level. Geographical location of oil deposits on the planet and the existence of a large number of its brands make it impossible to create a global market for black gold.

The Price that is currently considered to be a reliable guide, is formed on the Intercontinental futures exchange in London. Bidding on it is openness and transparency. However, it is worth noting that this exchange market accounts for only about 1% of the global turnover of oil. The remaining volume is transferred from sellers to buyers by entering into off-market contracts.

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Price markers

Varieties of oil futures contracts which are traded on the world's largest exchanges are the baseline or reference against other brands of black gold. Their quotes serve as a basis for determining the global prices. In the United States to markers varieties is the Texas light oil called WTI. It contains about 0.24 percent sulfur. Futures on WTI traded on the new York Mercantile exchange. On the North American continent quotes of this contract are the most important indicator of the energy market.

In Europe, as a basis of varieties used widely known Brent. It consists of several types of oil produced in the North sea the Norwegian and British companies. The density of the mixture Brent is superior to the American mark WTI. To date, the prices for 70% of all varieties of oil in the world is derived from the futures quotations on the London stock exchange. This brand has become a reference in the market of hydrocarbons due to its high liquidity and the availability of reliable providers.img alt="cost of oil production in Russia 2014" height="399" src="/images/2018-Mar/26/00b0fb4893aebeddc9e9636a4b555408/2.jpg" width="600" />

Cost

Oil Producers bear the costs associated with the extraction, processing and transportation of black gold. The sum of all these costs is called Prime cost. It is calculated in monetary terms per unit of the final product. For example, the cost of oil production in Russia in 2014, according to Rosstat, amounted to an average of $ 11 a barrel. It is important to note that there are many components that can be taken into account in this figure. In addition to the costs of extraction and processing, manufacturers need to pay taxes and to invest in exploration of new fields. Assessment methods may vary. For this reason, the official information about the cost of oil production in Russia in 2014, sometimes at odds with the data of international analytical agencies. According to experts, the influential Morgan Stanley, the breakeven point in this period was at the level of $ 50. Compared with those published by Rosstat information about the cost of oil production in Russia in 2014, this figure may come as a surprise, if not to take into account the high level of taxation in the industry.

Variations

As is known, hydrocarbon prices are highly volatile. However, the total costs of their extraction is not subject to significant fluctuations. Reason for changes in the cost of oil production in Russia for years, mostly related to the General level of inflation. In the world of commodities and their processing tend to be more expensive.

Statistics show relative stability in the average level of expenditure on the production of energy. The cost of oil production in Russia in 2013, the number of deposits was $ 14 per barrel. Followed in a short time, the turmoil in the hydrocarbon market and catastrophic falling of quotations of "black gold" did not cause major changes in costs for manufacturers.

In the period of steadily high prices for energy resources, the level of financial investment required for their extraction and transportation, not to different from the usual. The cost of oil production in Russia in 2012 was held in the usual range. It should be noted that at that time the mark of $ 100 per barrel seemed invincible. For the same level of expenses, the company received high profits from the sale of hydrocarbons. In contrast to the sharp jumps of stock quotes, a graph of the cost of oil production in Russia surprises.

Factors

The cost of production of energy largely depend on the characteristics of the Deposit. The important role played by its geographical location, climatic conditions and the depth of the black gold. The cheapest cost extraction of oil in the Persian Gulf. As example is Saudi Arabia where the cost of a barrel is estimated at 8 $. There are deposits located on the continental shelf. A small depth facilitates the extraction. The neighborhood fields with major seaports reduces transportation costs.

Because of the climatic conditions, the cost of oil production in Russia is higher than in the countries of the Persian Gulf. Despite the huge distance, the delivery problem solves well-developed infrastructure and a network of pipelines. In Russia, the cost of oil per barrel is markedly different in different fields. Old and designed for a long time, the figure is 28 $. The reason for these relatively high costs is that the oil reserves are hard to recover. On the new fields, the cost of oil production in Russia is 16 $ per barrel.

Norway

A Significant portion of hydrocarbons in the country located in remote areas, far from existing infrastructure and potential consumers. This leads to higher exploitation of wells and transportation of oil. Deposits in this region began to develop relatively recently, and hydrocarbon reserves are still high. The cost of a barrel of oil in Norway is 21 $.

Nigeria

This country is the largest exporter of energy in Africa. However, frequent cases of sabotage and theft of oil hinder the development of the mining industry. Currently, for security reasons, Nigeria has to develop new fields located in the sea. These projects reduce risk for mining companies in socially and politically unstable country, but inevitably increase the cost of production. The average cost per barrel in Nigeria is 29 $.

Canada

The Main increase in energy production in this country is of unconventional type of oil produced from tar Sands. Their deposits are located in the Northern forests of the province of Alberta. The development of such fields requires the record-high investments and takes a long time. Due to the remote location of deposits and the insufficient number of pipeline transport costs are among the largest in the industry. Thanks to tar Sands in Canada in terms of reserves of hydrocarbons is ranked third in the world after Saudi Arabia and Venezuela. The main drawback of unconventional oil is that its extraction requires huge amounts of fresh water. In the foreseeable future, energy derived from tar Sands, will be able to satisfy only a few percent of world demand. The cost of a barrel in Canada is 27 $.

Iran

Currently, the Islamic Republic is seeking to revive its oil industry, under pressure from international economic sanctions over three decades. After the resumption of the export of Iranian "black gold" in the countries of the European Union, its daily production has jumped by 300 thousand barrels. The main advantage of the Islamic Republic is exceptionally low-cost producer of oil. It is about $ 9 per barrel.

Iraq

The country ranks second in oil production among States, OPEC. Theoretically, the production of hydrocarbons in Iraq is one of the cheapest in the world. The cost of a barrel there is estimated at 10 $. But there are difficulties associated with the political situation and security issues that significantly increase the real costs of mining companies. The country struggles with armed groups seized part of its oil fields. Despite this, Iraq could increase production of energy.