Introduction
In this ongoing series discussion of Guyana’s prospect during its coming time of oil and gas production and export (that is circa 2025), I had introduced in last week’s column the notion of the break-even price. As indicated there, this is the price at which the total cost of operating any business is just equal to the total revenue obtained from the sales of that business’ output. Cost, as used here, refers to opportunity or economic cost, as this was defined last week. Determining the break-even price is a strategic operational necessity for all businesses and is therefore essential for efficient decision-making in the emerging oil and gas industry in Guyana.
As was also described in last week’s column, the break-even price as used there, was approached from the perspective of private businesses, and in particular, those who are responsible for operating the business on behalf of its legal owners. In the case of Guyana’s oil and gas, this would be the consortium of foreign interests that are legally responsible not only for exploration and discovery, but also development and production of the oil and gas resources.