Guyana could produce 1.5M barrels of oil per day by 2035

Guyana Chronicle

GEORGETOWN 08 08 2022

GUYANA is on course to produce over 1.5 million barrels of oil equivalent per day (BoE) by 2035, according to information released by Rystad Energy.
The Norwegian research company was able to arrive at this projection after assessing statistics from the ongoing operations at the Stabroek Block, offshore Guyana.

The full findings of the report were outlined on Wednesday by Senior Vice-President and Head of Latin America for Rystad Energy, Schreiner Parker, during a press briefing in the boardroom of Sagacity/OilNOW.
According to Parker, daily production could increase even further by 2040 should there be additional discoveries by operators within Guyana’s oil-and-gas sector.

He went on to say that increased production also means increased revenues, so Guyana is well positioned to receive at least US$3.6 billion per annum by 2030 and US$12.4 billion annually by 2040.
“Things are moving so quickly here,” Parker commented, noting that the projections included in the report do not cater for ExxonMobil’s recent discoveries at the Seabob-1 and Kiru-Kiru wells.

Guyana’s Stabroek Block currently boasts estimated recoverable resources of approximately 11 billion barrels of oil. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator of the block and holds 45 per cent interest. Hess Guyana Exploration Ltd. holds 30 per cent interest and CNOOC Petroleum Guyana Limited holds 25 per cent interest.

The Rystad Report examines oil-and-gas operations and Guyana’s rise from a frontier exploration player to being one of the top five offshore producers in the world; this is a title which the country could hold over the next decade.

Parker said Guyana presents material value and growth for both the government and international oil companies.
The report also focuses on the advantaged nature of Guyana’s deep-water production due to its lower emissions intensity and low-cost resources. It also establishes that Guyana is taking steps to implement best governance practices in order to harness oil-and-gas revenues to promote broader economic development

According to the Rystad report, while Guyana currently ranks 20th among the top oil producers in 2022, by 2035 Guyana is expected to place as the number four offshore oil-producing country in the world.


“[This is] ahead of more historic provinces like Norway and the United States, United Kingdom and Mexico. So, this is quite the big jump in a small amount of time. You wouldn’t have necessarily thought that in the span of 12 to 14 years you could have made that big of a jump, but from what we’ve seen that picture is very realistic,” Parker commented.

The report also presented a comparative analysis of the government’s take if the Stabroek Block were developed in other territories.
This showed that Guyana rakes in a 59 per cent profit or US$41 billion, and places the country with a higher percentage and total value when compared to countries such as the US.

“If we run the Stabroek Block in the country like the United States, we see that the fiscal regime in the US for offshore would yield a 40 per cent take for the US government and total government take is $27 billion,” Parker noted.

With new blocks coming on stream in Guyana, it is expected that this government’s share will change.
Parker pointed out that Guyana falls in the median range on the scale of what differing governments would’ve gotten out of the oil block if it were developed in their territory. This shows that Guyana is still making massive gains off of the block.

“The fact that Guyana sits right in the middle is something of interest, because the Stabroek Block could have different take in different regions,” he said, adding: “The prolific discoveries will create significant values for both the government and the companies.

“Again these numbers are subject to change with more discoveries and we know that Exxon has a rather rigorous exploration plan still yet to be done for Guyana, so these numbers could and should only go up with more commercial discoveries.”

Parker commended the government for its mechanisms and institutions implemented in recent years to decentralise oversight of various areas of management of the oil-and-gas industry.


“The institutions are extremely important because institutions are designed to outlive administrations and institutions are what provide an anchor to avoid problems that administrations can have,” Parker explained.

He said the Sovereign Wealth Fund, the local content legislation, and the country joining the Extractive Industries Transparency Initiative (EITI) are some of the areas where the country is “getting it right” in terms of governance.

According to the report, Guyana has ranked higher than most other non-OECD countries in the World Bank governance dimensions; however, more work is required, as shown by its low EITI ranking in 2022.

The report also looked at the long-term sustainability of Guyana’s deep-water resources, given the impending energy transition. The report predicts that energy demand will peak around 2026 at 106 million BoE before drastically declining to as little as 30 to 50 million BEE by 2050.

As this decline occurs, it will be a case of survival of the fittest oil resources. But even as demand for oil resources peter out, Parker believes, that the quality of the resources produced in Guyana will strategically position the country to still be a massive contender despite declines.

According to Parker, the future of the reduced demand will favour supplies coming from resources that have a low break-even cost, meaning the point where profits being to generate, while the second factor being that the resource has low emissions intensity when compared to other resource suppliers. In both of these regards, Guyana’s resources are well positioned to remain a strong contender in the supply mix.

“If we look at the offshore production globally and the cost-supply curve, Guyana fits very nicely,” Parker said, adding: “When we look at the break even to Guyana, it’s around averaging $28 per barrel and this includes future developments as well. This really positions Guyana well in terms of being an attractive source of supply in the future.” 08 04 2022

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