As if the transformation that Guyana has undergone since the 2015 announcement by ExxonMobil that the country had made its first oil find has not been sufficiently impactful, since that time, the portents for the country’s oil and gas sector, going forward, are becoming increasingly pronounced, according to a December 31 Oil Price.com article authored by the energy writer, Matthew Smith.
Titled, ‘Guyana’s Oil Boom Will Only Accelerate’, the 2023 article notes that even as the country’s first oil field is already yielding up to 360,000 barrels per day, ExxonMobil’s pursuits have already uncovered 11 billion barrels in the Stabroek Block. Taken in isolation, these numbers mean little to Guyanese, the hoped for most important beneficiaries of the oil bonanza, though Smith’s article, which describes Guyana as the likely “last great frontier of the offshore oil boom,” puts it into perspective. At home, political speculation continues to be rife as to whether the longer term management of the country’s oil resources will be sufficiently prudent to deliver optimal returns to a country that has spent its entire life up until now in poverty.
Smith is more than a trifle ‘fast and loose’ in his prediction, asserting that the country’s “low break even prices, the quality of its oil, and the very favourable production-sharing agreement Exxon secured means development will be rapid.” In recent years, the never –ending comings and goings of potential investors, the frequency of high-profile oil and gas conferences in the country’s capital, Georgetown, and evidence of spending on things like physical infrastructure and payouts of one sort or another to various categories of Guyanese have created a semblance of a country ‘going somewhere’ in a hurry.
At the level of the Caribbean Community (CARICOM) where over five years ago little regional attention was paid to Guyana’s political economic woes, the country’s critical role in bailing the region out of its widely acknowledged food security crisis is not being denied. It is mostly on the wider global implications of Guyana’s oil boom, however, that Smith’s article dwells. The oil recovery process may be a ‘big deal’ for Guyana, and its development, though Smith asserts that “It is the ExxonMobil-led consortium operating the 6.6-million-acre Stabroek Block offshore Guyana which stands to benefit the most from what analysts describe as the last great frontier offshore oil boom.”
The 360,000 barrels per day being derived by ExxonMobil and its partners amounts to the lion’s share of the takings from the Liza oilfield alone, though, to a country for which benefitting from oil earnings even as recently as a decade ago was little more than a pipe dream, that is no longer an issue. It is a matter of the country taking a kind of half-a-loaf-is-better-than-none posture which provides more the likelihood of a modest break from perpetual poverty. “This is a spectacular development considering that Exxon only made the first discovery in the Stabroek Block in May 2015,” Smith writes. “While other drillers, like CGX Energy have found oil in Guyana’s waters,” he goes on, “it is Exxon that is best positioned to fully benefit from the former British colony’s tremendous hydrocarbon potential.”
The numbers in themselves are mind-boggling, according to Smith, who writes that “since 2015, 11% of the crude oil discovered globally has been found in Guyana, with the vast majority occurring in the Stabroek Block where ExxonMobil has estimated that it has found more than 11 billion barrels of oil resources.” That number, he says, will keep growing as the global energy super major makes further discoveries in the prolific Stabroek block. Here in Guyana, the nexus between ordinary citizens and the country’s considerable oil wealth is limited largely to their understanding of the transformative impact that it will have on the country and more particularly on their own lives.
Contextually, the shrill voices of the country’s handful of environmentalists, concerned mostly over the dangers that might arise from oil spills, have little traction, are rarely if ever audible, while the issue of oil and the environment is not even remotely an issue between the country’s perpetually cat-sparring political parties. Nor is it at all surprising that Guyana’s new-found oil wealth is being celebrated in a region where Guyanese were seeking ‘refuge’ from the country’s economic woes up to less than a decade ago. Nor are the various high-rolling beneficiaries from the Guyana bonanza shy about making their good fortune public.
Smith writes: “The tremendous success experienced by Exxon in Guyana is unmatched and saw the integrated energy company prioritize Guyana in its 2020 capital plan. The global energy super major’s CEO, Darren Woods, reiterated in February 2022 that offshore Guyana will form a key part of Exxon’s production growth with the current discoveries. Liam Mallon, President of ExxonMobil Upstream, stated that the super major is focused on acting as an essential partner for the government of Guyana to develop the country’s vast offshore hydrocarbon resources.” Money talks. Smith discloses that ExxonMobil is seeking to invest “$20 billion to $25 billion annually between now and 2027” out of which “70% of that spending is to be allocated to upstream operations with the Permian, Brazil, Guyana, and LNG being the top priorities.”
Guyana, from ExxonMobil’s perspective, is ‘in the big league.’ Smith writes that “Exxon’s swathe of world-class oil discoveries in the Stabroek Block indicates that the U.S. Geological Survey grossly underestimated” reportedly by at least one billion oil equivalent barrels. Nor does the oil ‘bonanza’ end there. Smith notes that while “the prolific Stabroek Block” continues to be the focus of ExxonMobil’s attention, the company remains mindful of the prospects offered by “the Canje and Kaieteur Blocks” and may well have those blocks in its sights as part of its “plans to drill more than 60 wells in offshore Guyana over a six-year period as it seeks to exploit what is fast becoming a key driver of production growth.”
This exercise, he writes, “includes a 35-well drilling campaign in the Stabroek Block starting during the third quarter 2023, when the current 25 wells being targeted are completed, with the plan expected to conclude by the end of 2028.” Given what, Smith says are further ExxonMobil plans “to drill 12 wells on the Canje Block and another 12 on the Kaieteur (which blocks are still believed to possess considerable petroleum potential despite recent non-commercial discoveries and dry holes), it would appear that ExxonMobil will continue to be Guyana’s high profile partner for many years into the future.
It has been estimated that Canje contains up to 10 billion barrels of undiscovered oil resources while Kaieteur could hold anywhere up to 2 billion barrels. On the whole, Smith writes, given “Guyana’s industry-low breakeven prices” the country’s waters represent “a highly profitable jurisdiction for Exxon” given the fact that the company was able to secure “a very favourable production-sharing agreement with the national government in Georgetown.” What Smith says is “another compelling reason for Exxon to prioritize developing its assets in offshore Guyana” is “the high-quality oil being discovered in the Stabroek Block and pumped from the Liza oilfield.”
The oil from the Liza, he writes, is not only “light and sweet,” but also has a low greenhouse gas intensity to extract…in comparison to heavier varieties being produced in other South American countries, like Venezuela and Colombia. Smith writes: “It is not difficult to see why Exxon has prioritized its assets in Guyana for further development. Not only was Exxon able to secure a very favourable production sharing agreement with Georgetown which contributed to industry-low breakeven prices, but production will keep expanding at a rapid clip making Guyana an important profit center. After a substantial outcry, such an extremely beneficial production-sharing agreement will likely never be secured by any other energy company in Guyana.
“The low carbon intensity of the petroleum produced in Guyana amplifies the importance of those operations in a world seeking to sharply reduce greenhouse emissions in the fight against climate change. For those reasons, Exxon is poised to benefit significantly from its investment in offshore Guyana and unlock considerable value for shareholders,” Smith concludes.
