With population of fewer than 750,000 people, Guyana—a neighbor of Venezuela—has always depended on commodities. Sugar, gold, shrimp, timber, bauxite, and rice account for nearly 60 percent of this South American country’s gross domestic product (GDP). Now, Guyana is set to add another valuable commodity to that list.
In 2015, ExxonMobil—whose market capitalization is roughly 100 times Guyana’s GDP—made its first oil discovery offshore Guyana, adding another very precious commodity to the tiny nation’s potential product slate.
Three years and dozens of new oil discoveries later, Guyana is set to produce its own oil for the first time ever, in 2020.
Over the past couple of years, the success rate of discoveries has been phenomenal, analysts say, and some expect that Guyana could be on the road to joining the few non-OPEC nations in the world capable of producing more than 1 million bpd of oil.
Analysts warn that potential development challenges—considering that the area has never produced oil and lacks infrastructure—and the resource curse may spoil the Guyana offshore oil party.
But as things stand now, there are more optimists than pessimists that Venezuela’s small neighbor to the east could become an oil producer capable of plugging part of the conventional oil supply gap next decade. Attractive fiscal terms, scale of resource, and reservoir quality are all there in the Liza complex operated by Exxon, according to Wood Mackenzie analysts, who estimate that the complex has accounted for 15 percent of all conventional crude oil found globally since 2015.
Two months ago, Exxon announced a ninth oil discovery offshore Guyana, which adds to already estimated resource of more than 4 billion oil-equivalent barrels discovered to date.
Exxon expects Liza Phase 1 to start producing oil by early 2020, via a floating production storage and offloading (FPSO) vessel—up to 120,000 bpd.
The Guyana discoveries have the potential for up to five FPSO vessels producing more than 750,000 bpd by 2025, Exxon says.
“Guyana has hit the jackpot,” Maria Cortez, Latin America upstream senior research manager with Wood Mackenzie, said in August, commenting on Exxon’s ninth discovery.
“If this small South American nation with, a population of about 750,000, can properly manage the billions of dollars of revenue about to come its way, it may become the richest corner of the continent.”
In Orinduik Block, another block offshore Guyana, Eco (Atlantic) Oil & Gas, which is partnering with operator Tullow Oil, announced last month that an independent analysis found that there are at least ten exploration leads with close to 3 billion barrels of recoverable oil potential in the Orinduik Block. Tullow Oil and Eco plan to drill their first well in the block in early Q3 2019.
“Guyana is the jewel in the crown, the mother of dragons. That is the hottest exploration area in the world. It’s no longer frontier, it’s a sub-mature basin,” Eco’s chief executive Gil Holzman told S&P Global Platts in an interview this month.
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