Big US oil majors have ventured into the home of Opec this week to deliver a brutal message to the Middle East-dominated oil cartel: 'Anything you can do we can do better.'
Ryan Lance, chief executive of ConocoPhilips, told members of the Organisation of the Petroleum Exporting Countries (Opec) that "unconventional" breakeven production costs for fracking shale oil in the US were already down between 15pc and 30pc.
"Unconventional production is here to stay," he told delegates at Opec's energy seminar in Vienna, where the group's headquarters are based.
Mr Lance's remarks coming a day ahead of Opec's scheduled meeting to decide on the next steps in its price war with US shale drillers show the determination of North American producers to maintain the revolution in production which has partly created a global oil glut and driven prices to multi-year lows.
Last November, Opec decided to allow oil prices to plummet in a desperate bid to seize back market share from unconventional producers mainly in the US.
Recent data issued by the US Energy Information Administration showed that America's oil production hit a 44-year high of over 9.56m barrels per day (bpd) in May, signalling that attempts by Opec to shutdown "high cost" drillers have so far failed.
Mr Lance said that up to 190bn barrels of oil could be recovered from the Eagle Ford area of the US because of the rapid development of new fracking technologies, which have driven down costs.
His comments follow those of his counterpart Rex Tillerson, chief executive of Exxon Mobil, who said that the oil market was currently ungoing a period of "price discovery" to find the true cost of a marginal barrel of crude.
The defiant mood of the US oil majors attending the event in Vienna will come as a blow to some of Opec's struggling members who are facing financial meltdown from the ongoing slump in prices, which are 40pc lower than the $115 per barrel last seen in June 2014.
New fracking technologies are driving down production costs (Photo: Cuadrilla)
Mr Lance said that the industry was "re-setting itself" to the new lower price environment.
As big oil in the US has talked up its ability to thrive in a lower price world, Opec members have signalled that demand and cost of a barrel could rise soon.
Iraq's oil minister Adel Abdel Mahdi said that he thinks oil prices should be trading in a region of between $75 and $80 per barrel in order to achieve a fair balance between producers and consumers.
Telegraph
