Europe overtakes US as largest market for Guyana’s crude

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ExxonMobil operations offshore Guyana

…expert says Guyana among rising stars in Latin America oil shakeup

Europe has overtaken the United States (US) as the largest market for Guyana’s crude, with S&P Analysis indicating that since the onset of the Russian invasion of Ukraine and the sanctions it was met with, Europe has ramped up its purchase of oil from Guyana.

During a recent podcast titled “Guyanese Dream: Oil boom in Guyana could transform global crude market”, S&P Global Commodity Insights’ oil expert, Patrick Harrington spoke of shifts in the global market when it comes to Guyana’s crude sales.

“Initially, US West Coast and the United States was the primary destination. But in recent months, we’ve seen, especially after the Russian sanctions, Europe just slightly edging out US West Coast as the primary destination for the Guyana barrels, with the US West Coast just a narrow second,” Harrington said.

“And some interesting buyers also in there, like Brazil has been buying Guyanese crude. Which kinda seems counterintuitive. Especially as Guyana’s production ramps up, Guyana and Brazilian crude will be in real head-to-head competition. But Petrobras is also a buyer of Guyana’s. But primary export destinations at the moment are Europe and the United States.”

Harrington also contextualised Guyana’s oil production in the overall oil producers of Latin America, noting that while traditional oil exporters like Argentina and Venezuela are going through problems with their oil and gas industries, other countries like Guyana continue their rise.

“We’re seeing a kind of a shakeup or a reorientation of what we thought of as the crude landscape of Latin America, even though Guyana doesn’t really think of itself as Latin. Physically it’s there in Latin America. So, the traditional big producers in Latin America, Venezuela, Mexico, Columbia, Ecuador, they’re all having some problems.”

“Venezuelan exports have fallen off the map, Columbia, Mexico, Ecuador, are in decline. But Argentina, Guyana and Brazil are set. So, we have a shakeup of the traditional Latin American mix,” the oil expert further said.

In the first quarter of 2023, Guyana had received in excess of US$300 million in payments for profit oil and royalty, increasing the balance of its Natural Resource Fund (NRF) to well over US$1.4 billion by the end of March 2023.

Based on the gazetted inflows of money for the first quarter, the Natural Resource Fund received US$377.1 million in oil and gas payments. This includes a payment of US$157.6 million made in January for two profit oil lifts that occurred last year from the Liza Unity and Liza Destiny floating production, storage and offloading (FPSO) vessels. And at April 2023, the total amount Guyana had received was US$421 million.

Meanwhile, payments dating from last year’s transactions also included a royalty payment of US$57.5 million for 2022 fourth-quarter oil production. Guyana also received payments for two lifts that occurred this year from both FPSOs.

There was also a payment of US$82.2 million for a lift of profit oil that occurred on January 17, 2023, from the Liza Destiny FPSO. There was also a payment of US$79.6 million for a lift from the Liza Unity that occurred on February 3, 2023.

Guyana, with US oil giant ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being held in the Natural Resource Fund (NRF) at the New York Federal Reserve Bank, where it is earning interest.

The oil rich Stabroek Block, which is producing the oil, is 6.6 million acres (26,800 square kilometres). Exxon, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), is the operator and holds 45 per cent interest in the Block. Hess Guyana Exploration Ltd holds 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.

ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027, with possibly 10 FPSOs operational by 2030. The third project – the Payara development – will target an estimated resource base of about 600 million oil-equivalent barrels, and was at one point considered to be the largest single planned investment in the history of Guyana.

Meanwhile, the Yellowtail development, which will be oil giant ExxonMobil’s fourth development in Guyana’s waters, will turn out to be the single largest development so far in terms of barrels per day of oil, with a mammoth 250,000 bpd targeted.

The Uaru oil development, which will be the fifth one for the company offshore Guyana, is targeting between 38 and 63 development wells, including production, water injection, and gas re-injection wells. Exxon had previously also made known that they anticipate first oil from the Uaru development by late 2026 or early 2027.