There was a piece in the news today about Iraq asking CNPC to go ahead with existing plans to ramp up production at Halfaya oilfield to 400,000 bpd on condition that CNPC accepts deferred payment.
The interesting, and alarming, piece of information that came with the story is that the cost of production at Halfaya is said to be $15/barrel. While this is still rather low by industry standards, it means that Basra Heavy is about to reach the point where extraction cost meets or exceeds the selling price.
Basra Heavy, which makes up roughly a quarter of Iraq's southern exports, was fetching about $24 in late December when Brent was hovering just above $36. Today Brent fell to $27. You do the math.
The interesting, and alarming, piece of information that came with the story is that the cost of production at Halfaya is said to be $15/barrel. While this is still rather low by industry standards, it means that Basra Heavy is about to reach the point where extraction cost meets or exceeds the selling price.
Basra Heavy, which makes up roughly a quarter of Iraq's southern exports, was fetching about $24 in late December when Brent was hovering just above $36. Today Brent fell to $27. You do the math.
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