- Guyana’s oil boom is causing a colossal economic transformation in the impoverished former British colony.
- The Stabroek Block and the Guyana Suriname Basin hold significant oil reserves and are driving considerable revenue for its government.
- The International Monetary Fund predicts Guyana to be the world’s fastest-growing economy in 2023, and the former Prime Minister expects GDP to double by 2027.
In as little as eight years since ExxonMobil’s first offshore discovery in Guyana the impoverished former British colony has emerged as a major oil producer and exporter. In as little as four years, Exxon took the offshore 6.6-million-acre Stabroek Block from first discovery to first oil, an impressive achievement, especially when the complexities of deepwater drilling in a frontier oil basin are considered. The latest discoveries indicate that the Stabroek Block contains over 11 billion barrels of recoverable oil resources and that the Guyana Suriname Basin possesses far greater petroleum potential than originally believed. The prolific Stabroek Block has proven to be a gold mine for Guyana’s government in Georgetown despite the extremely favorable terms granted to the Exxon lead consortium exploiting the block. As a result, Guyana’s economy is growing at a rapid clip and will continue to do so for as long as the country’s oil boom is gaining momentum.
As of February 28, 2023, Guyana, according to the Ministry of Natural Resources, was pumping 383,000 barrels per day. That petroleum is being produced from the Liza oilfield in the Stabroek Block, which has a nameplate capacity of 360,000 barrels per day from two operational floating, production, storage and offloading vessels (FPSOs). It is speculated that by implementing efficiencies and operational improvements, Exxon can lift output from those FPSOs to over 400,000 barrels per day. There is every expectation that Guyana will be pumping 1.2 million barrels per day by 2027 as additional projects in the Stabroek Block come online. The next facility to commence operations is the 220,000 barrel-per-day Payara project which is scheduled for start-up later this year. Then there is the Yellowtail development targeting a rated production capacity of 250,000 barrels per day which is expected to come online during 2025.
The immense oil boom underway in Guyana, which will see the former British colony become the world’s further largest offshore petroleum exporter in little more than a decade, is driving a colossal economic boom. It is generating considerable revenue for a one-time cash-strapped government. For 2023 alone, petroleum exports are expected to earn more than $1.6 billion for Georgetown, and that is on top of the $1.1 billion received during 2022. This will deliver considerable benefits for the country of around 800,000, which has long been one of the poorest countries in South America. Both Georgetown and international organizations believe if appropriately managed, Guyana’s monumental oil boom will lift the former British colony out of poverty, making it one of the richest, and potentially the richest, countries in Latin America and the Caribbean.
According to the International Monetary Fund, black gold has catapulted Guyana to the position of being the world’s fastest-growing economy during 2023. The international government organization has forecast that the former British colony’s gross domestic product will expand by a whopping 37.2% this year which is the highest forecast growth rate globally for a sovereign state. Astonishingly, Guyana’s GDP is also expected to expand by an impressive 45.2% during 2024 as petroleum production and industry investment rise further. In a recent interview, Guyana’s former Prime Minister and President Sam Hinds, now the country’s ambassador to the U.S., stated that he expects GDP to double by 2027. Indeed, it is forecast that GDP per capita will double from $6,000 to $12,000 over that period, which based on 2022 IMF data, indicates Guyana will become the fifth wealthiest country in South America, placing it ahead of Brazil but behind Argentina.
There is the possibility that Guyana’s GDP will expand at an even greater clip than forecast by the IMF because investment in the former British colony’s offshore oil boom is growing rapidly. Those significant investment inflows, projected to be at least $7 billion for 2023, will drive further oil discoveries, the development of additional petroleum projects and ultimately higher oil production. The likelihood of further significant oil discoveries keeps rising with it increasingly apparent is that the Guyana Suriname Basin holds far more oil than originally assessed by the United States Geological Survey. In a May 2001 report, the USGS estimated that the basin had mean undiscovered oil resources of 15.2 billion barrels which is marginally higher than the 11 billion barrels found by Exxon in the Stabroek Block offshore Guyana.
There have been a host of oil discoveries in the basin outside of the Stabroek Block. Among the most recent is CGX Energy’s Kawa-1 discovery in the Corentyne Block. The company is drilling another wildcat well called Wei-1, which is expected to be completed during May or June 2023. It is speculated by Frontera Energy, which owns 77% of CGX. It has a consolidated 93% interest in the block, that the petroleum fairway running through the neighboring Stabroek Block passes through Corentyne into Block 58 offshore Suriname where Apache and 50% partner TotalEnergies have made five high-quality discoveries.
In 2019, Tullow Oil announced a discovery in the Orinduik Block, where it is the operator with a 60% interest, with Eco Oil and Gas controlling 15% and a joint venture between TotalEnergies and Qatar Petroleum holding the remaining 25%. That discovery was found to be heavy sour crude oil, which at the time was deemed non-commercial due to weak oil prices, although during 2022, the commercial potential of the find was reevaluated as petroleum prices soared. Orinduik is estimated to contain 5.1 billion barrels of oil equivalent. Tullow and partners are planning to drill another well during 2023 or 2024, with the most likely target being the Amatuk prospect which is believed to hold 267 million barrels and has a 28.8% chance of success.
There was also a series of wells drilled on the Kanuku Block in which Tullow has a non-operated 37.5% working interest, with the operator Repsol holding 37.5% and TotalEnergies the remaining 25%. While two discoveries have been made on Kanuku since 2020, they were both deemed non-commercial. The latest was the Beebei-Potaro wildcat well, completed in August 2022, which was especially disappointing. The targeted reservoirs were deemed of good quality but water-bearing which saw the well plugged and abandoned. Repsol is currently in the process of mapping its activities in the Kanuku Block and working the latest drilling results into the block’s subsurface models before embarking on another well. It is speculated that Tullow will relinquish its non-operated 37.5% interest in the block.
Investment in offshore Guyana, which is being described as the world’s hottest frontier oil play, continues to expand. Not only are international energy companies examining farm-in opportunities, but Georgetown launched the first ever licensing round during December 2022, offering 14 offshore blocks, three deepwater and 11 shallow-water, to bidders. Submissions were due to close on April 14, 2023, but that has been delayed until July 2023 to give prospective bidders more time to prepare their submissions and for Georgetown to implement the new regulatory framework and production sharing agreements. The auction has attracted considerable interest from energy heavyweights, including Shell, Chevron and Petrobras. Georgetown is reputedly considering another oil auction during 2024 which will drive further investment.
Guyana is undergoing a transformative oil boom that is lifting the tiny South American country out of poverty and turning it into one of the continent’s largest oil producers as well as exporters. In as little as five years since Exxon’s first 2015 discovery in the Stabroek Block, Guyana has emerged as the world’s fastest-growing economy. During 2020 as the rest of the world struggled with a pandemic-induced recession Guyana shrugged off the fallout to log an annual GDP growth rate of 43.5%. Since then, the country’s economy has kept expanding at a remarkable pace growing 20% during 2021 and then by a whopping 62% in 2022. It is rising oil production that is responsible for this astonishing rate of economic growth. By the end of February 2023, Guyana was pumping 380,000 barrels per day, with up to another 220,000 barrels daily expected to come online later this year. It is for these reasons that for 2023 Guyana will be ranked as the world’s fastest-growing economy, with GDP forecast to expand by an impressive 37%.
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