By Rowena Caine Aug 15 Oil prices are now too low for most OPEC countries to cover their spending needs, a Reuters survey shows. Although the cost of getting oil out of the ground is low in most countries in the cartel, growing social spending and ambitious infrastructure plans mean many oil producers now earn less from their oil sales than they need to fund their budgets. The weighted average of oil prices collected by members of the Organization of the Petroleum Exporting Countries was $106 a barrel last year - just enough to cover the average budget requirements of the group, according to figures compiled by one team of analysts, who declined to be identified. But oil prices are falling, and the OPEC crude oil basket price was just $100.88 a barrel on Wednesday, the OPEC Secretariat calculates. Seven of the 12 OPEC members, including Iraq, Iran and Nigeria, now need far higher oil prices to cover their budgets, data from economists and industry analysts shows. Iran's oil price needs rose 11 percent last year due to U.S. and EU sanctions, while the average break-even price for Iraq rose 16 percent, the figures show. Nigeria's oil price needs have also risen sharply thanks to the increasing cost of deepwater offshore projects, which the International Energy Agency says have attracted oil companies wishing to avoid the country's domestic turbulence. By contrast, average selling prices for oil covered the budgets of five key OPEC members, most of which are located in the Gulf: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait and Angola. Analysts at French bank Natixis expect Kuwait and the UAE to find it easiest to meet their budget needs thanks to high levels of oil production and exports relative to their populations. The budget needs of oil producers are generally much higher than their marginal operating costs, calculated as the cost of producing one extra barrel of crude oil from an existing field. In the mature oilfields of the UK North Sea, where the remaining oil is difficult to access, marginal output costs were around $46-53 a barrel last year, industry data shows. One industry analyst estimated the total marginal extraction cost of ultra-high pressure/high temperature (uHPHT) oilfields ranged from $95 to $110 per barrel based on British tax rules in place until this year. However, recent changes to UK tax including new tax breaks would bring those costs down to $85 to $95 per barrel. The following average estimates are from a Reuters survey of nine oil consultancies, banks and independent analysts: Oil prices needed to meet expenditure ($/bbl) OPEC Country 2012 2013 Algeria 121 119 Angola 81 94 Ecuador 112 122 Iran 123 136 Iraq 100 116 Kuwait 61 59 Libya 94 111 Nigeria 118 124 Qatar 59 58 Saudi Arabia 87 92 UAE 82 90 Venezuela 102 117 Marginal cost of producing one new barrel of oil Regions Dollars per barrel ($/bbl) Arctic 115-122 Brazil Ethanol 63-69 Central and South America 29-35 Deepwater Offshore 54-60 EU Biodiesel 106-113 EU Ethanol 98-105 Middle East Onshore 10-17 North Sea 46-53 Oil Sands 89-96 Former Soviet Union Onshore 18-25 Russia Onshore 15-21 US Ethanol 80-87 US Shale Oil 70-77 WAF Offshore 38-44 (Reporting by Rowena Caine in London; Editing by Christopher Johnson and Dale Hudson)
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