Insight
Cost inflation is here: the battle between margins and cost discipline intensifies
Report summary
Global upstream cost inflation is intensifying. Coming into this year, we forecasted unit costs would rise 7-10%. We now expect like-for-like project costs to be up 15-20% in the Lower 48 and 10-18% for conventional offshore in 2022. Potential cost inflation in 2023 could reach the low double digits. In the Lower 48 we expect 15-20% inflation, driven by commodity prices and high utilisation of kit and services. Exposure depends on location and operation type, and pre-existing contracting agreements. We forecast 10-18% offshore project cost inflation in 2022. This is driven by raw materials inflation but will be compounded by capacity and supply constraints.
Table of contents
- Executive summary
- Cost inflation takes flight
- Where is inflation today?
- Lower 48 – commodity prices and lack of resources are driving cost inflation
- Conventional offshore – long-lead-time kit demand and service costs on the rise
- It’s an uncertain market. What are some possible outcomes?
Tables and charts
This report includes 5 images and tables including:
- Lower 48 year-over-year cost inflation by category
- Sector demand change over time
- Sector supply change – 2013/2014 versus 2022
- Global FPSO demand by procurement decision
- Global average day rate by vessel category
What's included
This report contains:
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