Guyana is tipped to become one of the largest and most promising non-OPEC oil producers in the world and could encroach on certain markets due to its offshore costs being competitive.
Director of the Inter-American Dialogue’s Energy, Climate Change and Extractive Industries Program, Lisa Viscidi expressed this view recently during an S&P Global Platts podcast titled “A new President for Guyana, the next non-OPEC oil giant.”
Viscidi was at the time commenting on the political developments here and the impact those changes would have on Guyana as the country moves to develop its oil and gas resources.
The South American country is home to the biggest oil discovery in recent years. US oil giant, Exxon has estimated that there are eight billion barrels of recoverable reserves in the Stabroek Block, and until recently, it predicted that the country would produce 750,000 barrels of oil per day by 2025.
While noting that this target would have to be moved to 2026 as a result of certain delays, Viscidi expressed that the future looks very promising for Guyana when compared to other oil-producing countries.
“750,000 barrels of oil per day would make it (Guyana) the fourth-largest oil producer in Latin America in current production growth, that would be behind Brazil, Mexico and Columbia,” she outlined.
The extractive industries expert added: “In a couple of years, this would place Guyana as one of the largest sources of non-OPEC supplier…that’s very important.”
Commenting on the oil discoveries here and how this will fit into the global oil supply picture at a time of vast oversupply, Viscidi asserted that Guyana has a competitive advantage and has the potential to encroach on other markets.
“I think in terms of the comparison with other countries, Guyana’s offshore breakeven costs are quite competitive compared to some other sources, and it has large reserves.”
According to Viscidi, there is still the potential for more reserves to be discovered.
Just last week Hess announced that it had completed drilling another well and discovered two high-quality reservoirs.
The expert highlighted that in addition to the COVID-19 pandemic, the political standoff following the March 2 General and Regional Elections have caused several delays in major projects going ahead.
She noted that Exxon is looking to push the Payara project for September start-up this year. That project was originally supposed to start in 2019, but was delayed due to the absence of a functioning Government.
Viscidi said that the companies are now hoping to get the support of the new PPP Administration in order to get the permits “to get up and running.”
She posited that with the new PPP/C Government already filling key positions in Government, including that of the Natural Resources Minister, “it’s a good step forward.”
Meanwhile, she noted that Exxon, which is leading the Consortium with Hess and CNOOC, is now producing 98,000 barrels oil per day from the Liza 1 offshore well and it is hoping to meet its 120,000 barrels per day on August 10. The Liza Phase 2 development is still on schedule for 2022.
In terms of additional projects, Viscidi expressed that the political crisis has really delayed the possibility of any new auctions in the near future.
“This seems to be unlikely…because the new Government has to take place, new people have to take their positions, and there is going to be a steep learning curve, and there is a sense that Guyana needs to focus on what it already has; so I don’t really see new auctions taking place (soon).”