Guyana’s star as the world’s newest petrostate continues to rise. Exports rose last year, doubling to an average of 279,000 barrels a day by 2022, according to Kpler data. Key fields, including the Exxon Mobil-led flagship Liza field, are performing better than expected and have exceeded nameplate capacity, with Liza production averaging around 380,000 b/d . A third phase — from the Prosperity The floating production, storage and offloading (FPSO) unit, which arrived in Guyana this week, is on track to raise production to 600,000 b/d by 2024. The fourth unit of 250,000 b/d, yellow tail, is expected to come online in 2025, while environmental authorities are reviewing plans for a fifth, with first oil slated for 2026. The consortium recently estimated reserves at nearly 11 billion barrels, and partner Hess has raised the possibility of up to 10 FPSOs in total. Future production projections point to around 1.2 million b/d by 2027, making Guyana one of the most important sources of non-OPEC production growth in the world in the medium term. An ambitious pace of exploration continues to pay off, with nine discoveries made last year and 10 wells planned for 2023. There is particular excitement over the Fangtooth find, which could underpin a seventh FPSO.
Guyana has played a key role in helping supply Europe after the Ukraine war, as buyers seek alternatives to Russian Urals crude. The country exported 49% of its crude to Europe in 2022, about 137,000 b/d. The Netherlands, Italy, the United Kingdom, Spain and Germany are the top five European buyers. according to Kpler data. Guyana’s Liza (32° API) straddles the dividing line between sweet and sour and can replace Urals without the need to remove sulphur, while its Liza Unity Gold (35° API) is a close analogue to the North Sea Brent blend. Beyond Europe, Guyana also exports a significant portion of its production to the US, about 76,000 b/d by 2022, mostly via the Trans-Panama pipeline. The top three American buyers have been Chevron El Segundo and Marathon Petroleum’s Wilmington refineries, both near Los Angeles, and PBF Martinez’s facility near San Francisco.
Guyana’s gas potential is also coming into view. Exxon hopes to take a final investment decision (FID) this quarter on a more than $900 million gas-to-electricity project to bring electricity to Guyana; the 300-megawatt plant is designed to process about 50 million cubic feet of gas per day. Gas power will reduce emissions from current fuel oil feedstocks. Given Guyana’s modest energy needs, there is also optimism about potential LNG exports in the future. Exxon country manager Alistair Routledge said the main Liza reservoir, given its high oil cut, does not have much associated gas. But reservoirs in the southeast, near the border with Suriname, have a different mix of hydrocarbons, including a higher proportion of diesel. The company is now starting to tackle the “puzzle” of developing the block’s various resources, and whether the gas would be better sent onshore or exported.
The economic impacts have been profound. GDP rose 62% last year, with 11.5% growth in real non-oil GDP, according to the finance ministry. But Guyana still has unfinished business in creating frameworks and institutions to facilitate sound governance and avoid the dreaded “resource curse”. The government has taken a number of actions, including a local content law, audits of cost recovery provisions and various measures to improve accountability in oversight. But it is still working to consolidate its oil law and production-sharing contract framework, the breach of which has delayed a round of bids for 11 shallow-water blocks and three deep-water blocks months until July 15. Nor has he established a formal agreement. Petroleum Commission. Guyana was suspended from the Extractive Industries Transparency Initiative (EITI) last year after failing to report on its 2020 activities, although it is targeting a new July deadline to re- there low score” of 52, citing weaknesses in outcome evaluations, stakeholder engagement and transparency.
