The latest Upstream Capital Costs Index (UCCI) published by IHS unit Cambridge Energy Research Associates (CERA) shows costs have risen by 6% in the last six months and have doubled since 2005. CERA chairman Dan Yergin said, ‘Rising costs have become one of the new fundamentals driving the oil price. This is a serious concern and a major challenge for oil and gas companies and is leading to delays and postponements of many projects.’ Exchange rate fluctuations and the weakening dollar also contribute as do rising costs for raw materials and transportation. Specialized deepwater equipment showed the largest increase of any area on the index. Costs vary regionally with highest rises in areas of high activity including the Middle East, West Africa, South America and Australia. Track the UCCI on www.ihsindexes.com.
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