Insight
Cost inflation is here: the battle between margins and cost discipline intensifies
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
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 the following images and tables:
- 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:
