Economic Report 2018

5.1 UKCS Costs in Context

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Project Break-Even Costs In terms of total project break-even costs, the UKCS is in a competitive position relative to the peer group of comparable offshore basins. 23 When considering all undeveloped discoveries on the UKCS (including those currently deemed non-technical and non-commercial), almost 70 per cent have a break-even cost of less than $60/boe, compared with 63 per cent from the peer group of basins (see Figure 19 below). This cost profile will help the UKCS compete internationally to attract the investment required to develop these discoveries. This is a critical factor in converting contingent and possible reserves to proven and probable (see section 5.4).

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However, further work may be required to overcome specific technical and economic challenges within certain prospects.

Figure 19: Break-Even Costs of All Known Discoveries

5

50%

UKCS

45%

6

Comparable Offshore Basins

40%

35%

7

30%

25%

8

20%

15%

10%

9

5%

Share of Undeveloped Resources by Break-Even Oil Price

0%

10

20-40

40-60

60-80

Above 80

Break-Even Oil Price ($/bbl)

Source: Rystad Energy

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23 Norway, US Gulf of Mexico, Brazil, Australia, Malaysia, India, Nigeria, Mexican Gulf of Mexico

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