News
02/03/26
Flush with oil, Guyana doubles down on gas expansion
New York, 2 March (Argus) — After one of the biggest discoveries in recent
decades turned Guyana into the world's top oil producer per capita, the South
American nation is starting to turn its attention to natural gas. Guyana's
government is on a mission to diversify the country's economy and build up its
industrial base with the windfall from the giant offshore Stabroek find that was
made by an ExxonMobil-led group just over a decade ago. "We are going to
increase our oil output, and increase it at a very rapid pace," President Irfaan
Ali said last month at the Guyana Energy Conference and Supply Chain Expo in the
capital Georgetown. "But we are also focused on leveraging that increase to
expand the growth in the non-oil economy." ExxonMobil has already completed
construction of its first gas-to-energy pipeline, which will lower electricity
costs in Guyana when connected to an onshore power plant later this year. "The
oil chapter remains very strong, but the next strategic chapter, the one that
can broaden the impact for Guyana, is natural gas," ExxonMobil's upstream chief,
Dan Ammann, said. The US major is ready to respond with investment, engineering
and project execution as soon as the government approves permits and unveils
market frameworks. "We are committed to moving as fast as the government of
Guyana in doing what it takes to monetise the resource as rapidly, safely and
smartly as possible," Ammann said. Located on South America's northern coast and
bordering Venezuela, Suriname and Brazil, Guyana has emerged as one of the
world's fastest-growing economies as a result of its oil riches. Output from
Stabroek hit a key milestone of 900,000 b/d last year. Production capacity is
forecast to increase to 1.7mn b/d by 2030, when eight developments are expected
to be up and running. Hammerhead, ExxonMobil's seventh project in Guyana, is
being designed specifically with a plan to transport gas by pipeline to shore,
in addition to producing oil. Outside the conference venue, dozens of companies
filled booths and advertised everything from heavy machinery to oil field
services and even luxury apartments in gated communities available from $350,000
each. In Georgetown, the fruits of the country's construction boom are on full
display as roads once pitted by potholes are gradually replaced by widened
highways that aim to ease the city's perennial traffic gridlock. Cranes loom
over city skylines as new hospitals, schools, high-end hotels and shopping malls
spring up. The centrepiece of the infrastructure rollout is a recently opened
multi-million dollar high-span bridge connecting the east and west banks of
Georgetown, designed in part to speed up industrial expansion. South American
supply surge That Guyana is becoming a force to be reckoned with in the global
oil markets can be seen from forecasts showing that it — alongside Brazil,
Argentina and Suriname — is set to be a key driver of non-Opec supply growth in
the coming years. The country's emergence as an energy powerhouse has seen its
production eclipse that of some Opec nations, and it was no surprise to see
Saudi and UAE officials looking to forge closer links with Guyana at the
conference. While Guyana's oil wealth has lifted its economy, neighbouring
Venezuela offers a salutary lesson in the perils of the so-called ‘oil curse',
with decades of corruption and mismanagement of resources that have wreaked
havoc on its economy. Their contrasting fortunes are even more striking when you
consider that Venezuela sits atop the world's biggest reserves. "In a country
with 300bn bl of oil, seven million people have left over the past 3-4 years in
search of a better life for themselves and their families," Guyana's minister of
natural resources, Vickram Bharrat, said in reference to Venezuela. "On the
other hand, the country with 11bn bl of oil is the fastest-growing economy in
the world." Guyana could be an early beneficiary of regime change in Venezuela
after the US capture of President Nicolas Maduro in January. Maduro had revived
a centuries-old border dispute with Guyana and threats of annexation combined
with sabre-rattling over the oil-rich Essequibo region had heightened tensions
with its neighbour and delayed Stabroek drilling. The immediate risks have
eased, but it remains to be seen how the issue will be resolved since interim
leader Delcy Rodriguez has been a vocal supporter of her country's claims over
Essequibo. The region covers two-thirds of Guyana's territory, and Venezuela
refuses to recognise the role of the International Court of Justice in
adjudicating over the matter. Bad timing With some of the biggest oil companies
struggling to replenish reserves, the Guyanese discovery has also taken on an
outsized influence. It has prompted more than a flicker of regret from European
major Shell, which quit Guyana in 2014, just before ExxonMobil struck oil. "I
wish we hadn't walked away from Guyana when we did," Shell chief executive Wael
Sawan reflected recently. Inside the conference, Chevron chief executive Mike
Wirth addressed delegates after the company became Stabroek's newest stakeholder
last year. Its entry had been delayed by a legal wrangle over the future of US
independent Hess' 30pc stake in the block. The dispute with ExxonMobil over
rights of first refusal strained relations between the US majors and was only
resolved after a ruling from an international arbitration panel in Paris. That
cleared the way for Chevron to complete its $53bn acquisition of Hess and gain
the coveted Guyanese stake. Wirth said that he has never been more excited about
the future of Chevron: "Our partnership with Guyana is a big part of that
confidence." Georgetown is eager to show its responsible stewardship of the
country's bonanza. While it took Norway two decades to set up a sovereign wealth
fund following its first big offshore discovery, Guyana already has its own
version up and running. "We have a natural resources fund, while simultaneously
we are moving at lightning speed with infrastructure development," said Ali, who
won a second five-year term in September's elections. Plans are in motion to
shore up the country's growing financial sector by setting up a local stock
exchange and digital payments system. And the government wants to turn Guyana
into a regional hub for transport and logistics, and a leader in agribusiness
and ecotourism. Still, the manner in which the government has overseen its
new-found oil wealth has its critics, and there are concerns that the boom has
yet to filter down to much of the population. "There's nothing particularly
transformative about oil, especially for Guyana, especially far offshore,
because there's no real technological transformation that will occur within the
economy," University of Guyana Green Institute director Thomas Singh told Argus.
"The transformative effect of oil that was promised by the cheerleaders for
Guyana has not been realised." But ExxonMobil takes pains to point out its
contribution to boosting the domestic economy. Since 2015, more than $3bn has
been spent with local suppliers in the oil and gas industry, while Guyanese
nationals now make up about 70pc of the sector's workforce. For now, ExxonMobil
and its partners — Chinese state-controlled CNOOC, as well as Chevron — are
pressing ahead with plans to boost output. And ExxonMobil is happy to lay claim
to a unique success. Guyana is perhaps the "most exceptional" energy development
anywhere in the world, Ammann said, not only because of the scale of the
resource, but how it is being managed and developed. By Stephen Cunningham Send
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