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Matthew Smith

Matthew Smith

Matthew Smith is Oilprice.com's Latin-America correspondent. Matthew is a veteran investor and investment management professional. He obtained a Master of Law degree and is currently located…

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Guyana's Oil Boom To Gain Momentum In Second Half Of 2023

  • The ongoing development of the Stabroek Block by the Exxon-led consortium will deliver a tremendous economic and financial windfall for Georgetown.
  • The IMF forecasts a 37% y-o-y GDP growth for Guyana for 2023.
  • ExxonMobil’s Yellowtail project is expected to commence operations during 2025 and will boost Guyana’s oil production to nearly 900,000 barrels per day.
Guyana

The impoverished South American micro-state Guyana is in the midst of an epic oil boom which has seen the former British colony emerge as the hottest frontier offshore drilling region. The ensuing economic boom created by surging oil production saw Guyana emerge as the world’s fastest growing economy reporting stunning double-digit GDP since 2020, which hit an incredible 62% for 2022. Guyana’s petroleum production has expanded at a stunning clip, growing from less than 100,000 barrels a day in early 2020 to nearly 400,000 barrels per day by the end of March 2023. Despite recent negative developments, Guyana’s epic oil boom will continue gaining momentum for at least another decade with the country on-track to be pumping 1.2 million barrels a day by 2027. Recent events point to further oil discoveries being made and that energy investment will continue growing both of which will boost Guyana’s reserves and oil production.

 It is U.S. energy supermajor ExxonMobil, and consortium partners Hess and CNOOC, which is at the heart of Guyana’s burgeoning oil boom. The integrated oil company has made over 35 oil discoveries in the 6.6-million-acre offshore Stabroek Block where it holds a 45% working interest and is the operator. Those have endowed Exxon and its partners with estimated oil resources of over 11 billion barrels. The supermajor continues to make discoveries in the Stabroek Block as it progresses its latest drilling campaign

The last discovery, which is the second for 2023 after the Fangtooth SE-1 well, was announced toward the end of April 2023. Exxon found oil with the Lancetfish-1 wildcat well which is located approximately four miles to the southeast of the January 2022 Fangtooth-1 discovery. Lancetfish-1 was drilled to a depth of 5,843 feet or 1,780 meters and found 92 feet, 28 meters of oil-bearing sandstone. According to Alistair Routledge, president of ExxonMobil Guyana, the discovery “demonstrate(s) the Stabroek block’s continued exploration potential”.  It points further oil discoveries being made despite the Kokwari-1 exploration also completed during April 2023 coming up dry. Related: Warren Buffett Buys Up Even More Occidental Petroleum

The energy supermajor continues to prioritize development of the prolific Stabroek Block committing to investing $12.7 billion in the Uaru project, the fifth such operation to be developed by Exxon in the block. The Uaru project has been approved by Guyana’s government in Georgetown. The operation will have 10 drill centers with 44 production and injection wells targeting over 800 million barrels of oil resources. It is anticipated that Uaru will commence production during 2026 with the capacity to pump 250,000 barrels of oil per day.

Earlier in April 2023, the Prosperity Floating, Production, Storage, and Offloading vessel, known as an FPSO, arrived in Guyana’s waters. Prosperity will develop the Payara oilfield is located to the north of the Liza field, which analysts have described as the world’s most exciting frontier oil play. It is anticipated that Payara will start operations later this year to exploit a resource containing 600 million barrels of oil through 10 drill centers with 20 production and 21 injection wells. Payara has planned capacity to pump 220,000 barrels per day which will boost Guyana’s total production to over 600,000 barrels a day. 

Exxon also has the 250,000 barrel per day Yellowtail project planned, although a final investment decision, or FID, has yet to be made. If approved, Yellowtail is expected to commence operations during 2025 and will boost Guyana’s oil production to nearly 900,000 barrels per day. These developments indicate that the former British colony is on track to be pumping at least 1.2 million barrels of oil by 2027, securing Guyana’s position as the third largest oil producer in Latin America and the Caribbean. The prolific nature of the Stabroek Block with over 35 oil discoveries and 11 billion barrels of oil resources is why Exxon prioritized its development and has chosen to exit higher risk South American jurisdictions such as Colombia to concentrate on Guyana. 

While the Exxon led consortium operating the Stabroek Block is the key driver of Guyana’s massive oil boom it isn’t the only game in town. CGX Energy, a 78% owned subsidiary of Frontera Energy, announced in January 2022 the discovery of oil with the wildcat Kawa-1 well in the northern tip of the offshore Corentyne Block. Despite delays and drilling problems the Wei-1 well spudded during January 2023 has drilled to 19,142 feet compared to a planned depth of 20,500 feet with completion expected by the end of May 2023. The well to date has encountered multiple oil-bearing intervals in the Maastrichtian and Campanian formations with the presence of medium sweet 24.9 API oil. CGX has stated however that “It is not yet certain that the hydrocarbons encountered to date in the Well are yet sufficient to underpin commercial development on the Northern portion of the Corentyne Block.” The northern section of the block is believed to contain the same petroleum fairway that runs through the Stabroek Block and into neighboring Block 58 offshore Suriname where Apache and TotalEnergies have made five commercial discoveries.

The ongoing development of the Stabroek Block by the Exxon led consortium will deliver a tremendous economic and financial windfall for Georgetown. The IMF has forecast that Guyana’s economy will expand by a notable 37% for 2023 and then an incredible 45% next year securing the South American micro-state’s position as the world’s fastest growing economy. Oil from the Stabroek Block is delivering a tremendous financial windfall for Georgetown. According to Guyana’s central bank petroleum royalties and profits generated $201.5 million for April 2023 alone. The Ministry of Finance in January 2023 forecast that Guyana’s combined oil royalties and profits for the year will total $1.63 billion, which is a 31% increase over 2022. There is speculation that the former British colony’s revenue from oil could be even greater with the Lisa field now pumping around 400,000 barrels a day, well above nameplate capacity of 340,000 barrels daily.

By Matthew Smith for Oilprice.com

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