Guyana’s oil export revenues are expected to rise by 31% to $1.63 billion in the current year (2023), according to government estimates.
Finance Minister Ashni Singh said on Monday (January 16) that this forecast is mainly due to increased production from the addition of a third production facility towards the end of the year, according to Reuters.
Guyana produces about 360,000 barrels per day of oil, and aims to increase production to 1.64 million barrels per day by the end of the decade, according to information monitored by the specialized energy platform.
Singh added that the country also plans to launch natural gas exports from its offshore fields, at least 50 million cubic feet per day, to be sold from the two production vessels that are currently operating.
Estimates of oil production in Guyana
Ashni Singh described 2022 as a “prime year for exploration”, with 11 oil wells drilled and 10 new commercial discoveries, in the country’s budget presentation for this year on Monday.
The results of drilling pushed the country’s reserves to more than 11 billion barrels of recoverable oil.
It is estimated that the country’s oil and gas sector expanded by 125% in the last year (2022), with a total of 101.4 million barrels of oil produced, compared to 42.7 million in 2021.
Oil production in Guyana could reach about 810,000 barrels per day by 2025 with the commissioning of the third production vessel, according to Singh.
Responsibility for oil production in the country rests entirely with a consortium led by the American Exxon Mobil Corporation, which includes the American companies Hess and the Chinese Sinooc.
First oil refinery in Guyana
Singh said Guyana’s Natural Resources Fund held $1.27 billion at the end of 2022, after drawing down about $608 million to fund the government’s development priorities.
He stressed that the government plans, separately, during the first quarter of 2023, to evaluate a total of 9 bids received through a competitive process to build an oil refinery in the country.
Guyana plans to build an oil refinery with a capacity of 30,000 barrels per day, the first in the South American country, in an effort to meet the growing domestic demand.
Construction work on the first oil refinery, which will be located on public land near the Berbice River, is expected to begin by the first half of 2023, with completion of the project two years later.
Guyana’s oil exports during 2022
In a related context, oil exports in Guyana jumped by 164% in 2022, supported by increased production and demand, especially in Europe, as refineries hungry for imports increased to replace Russian supplies.
Oil export revenue rose to $1.1 billion last year, from $409 million in 2021, according to official figures reported by Reuters, thanks to an increase in oil production since the ExxonMobil-led coalition began pumping in 2019.
Revenue thus exceeded the country’s initial forecast of $958 million, given soaring global prices in the wake of Russia’s invasion of Ukraine.
Guyana’s exports averaged 265.7 thousand barrels per day last year (2022), more than double 2021’s exports of 100.7 thousand barrels per day, according to shipping data from Refinitiv Eikon.
Europe was the largest recipient of supplies, accounting for 49% of shipments, surpassing the volumes received by Asia, the former top destination, which received 34% last year.
The data showed that producers also found new customers for crude oil, as they shipped more than 6 million barrels to neighboring Brazil.
The following chart – prepared by the specialized energy platform – shows the developments of oil production in Guyana:
ExxonMobil in Guyana
Guyana’s oil production increased and its exports flowed, after ExxonMobil’s second floating production ship was put into operation last February, as European refiners were looking for alternatives to Russian oil in the wake of its invasion of Ukraine.
ExxonMobil also announced its readiness to approve its fifth project for oil production in Guyana, in the Oro field, which will pump about 250,000 barrels per day of oil at its peak.
ExxonMobil’s head of Guyana operations, Alistair Routledge, said the company had submitted a development plan for the oil field, and a preliminary construction contract was awarded last fall to Japan’s Modec.
If the Government of Guyana approves the plan, the coalition may agree to spend on the project next April.
This is a continuation of the alliance’s efforts, which aims to pump 1.2 million barrels per day of oil and gas by 2027 from all developments, according to Hess, which is nearly 3 times last year’s production (2022).
India responds to Guyana’s calls
In this context, the upcoming bidding round for Guyana’s offshore blocks has attracted interest from major energy companies from Asia to Europe and America, according to people familiar with the matter, even as the government continues to set the terms of the auction.
India’s ONGC Videsh – the overseas investment arm of the state-run Indian oil and natural gas company – is considering bidding for some of the country’s 14 exploration blocks.
Indian Oil is also looking to work in Guyana in cooperation with ONGC Videsh, according to Reuters, citing people familiar with the talks.
This comes after Guyana President Muhammad Irfan Ali invited public and private Indian energy companies to participate in the bidding round, during his visit to New Delhi last week.
Guyana offers 3 deepwater blocks and 11 shallow water blocks, each with an average area of 2,000 square kilometers. Bidding is expected to open next April in Georgetown.
Western interest in oil production in Guyana
Several European and American companies have also researched in recent months about the terms of the auction to consider bidding to participate in the country’s oil production.
Exxon Mobil’s head of Guyana operations, Alistair Routledge, announced that the company is considering bidding for the new blocks.
“Of course we will look into it,” he said, adding that “it would be too early to say yes or no” to participation before the state issues the full terms of the new production contracts.
Many bidding decisions hinge on Guyana clarifying the terms of the new production sharing agreement, which differ from the one signed with the ExxonMobil alliance for the 26.8 thousand square kilometer Stabroek block.
Guyana’s Finance Minister, Ashni Singh, said the licensing round would be open until April 14, with the winning bids to be announced by the end of the first half of the year.
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