Thursday, October 6, 2022

Guyana production on path to rival OPEC top guns

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It is estimated that by the mid-2020s to 2030, oil production in Guyana could hit 750,000 barrels per day but this figure may ‘underestimate the country’s production’ the American Security Project (ASP) has said.

ASP said unlike other recent discoveries of offshore petroleum resources in places like Israel, Egypt, Australia, or Russia, almost all the reserves are expected to be valuable light sweet crude, not harder to monetize resources like gas or heavy oil.

With the start of production in December at the Liza Phase 1 Development, output is expected to swiftly rise to reach the peak 120,000 barrels per day. If all goes smoothly in permitting and production, output could rise to over 1 million barrels per day by 2030. At such a level, Guyana would rank ahead of OPEC countries like Ecuador, Equatorial Guinea, or Gabon.

“In fact, these production levels may underestimate the country’s production, because they only account for the ExxonMobil/Hess/CNOOC consortium’s license in the Stabroek block. As other oil companies explore elsewhere in Guyana’s waters, they could see similar outcomes,” ASP had noted in a report.

With Guyana’s small population of just over 750,000 people, ASP said the country will quickly rise to the top of the rankings of oil production per person, outranking even Gulf monarchies like Kuwait or the United Arab Emirates. “Such a windfall will undoubtedly change the country: the actions of the government and people of Guyana will determine how it changes,” the ASP report stated.

The opportunity that oil wealth presents is clear, ASP said. More money will flow into Guyana, both to government coffers in the form of royalties, profit sharing, and lease payments; and to the broader economy, as workers are hired, and local contracts are signed. The economic boom, if directed properly, could provide the basis for dealing with longstanding security, economic and social problems.

“However, throwing money on top of intractable social problems without reform could end up only making them worse. A growing body of evidence shows that unexpected increases in resource wealth given to countries with weak and unstable political institutions can only make the problems worse and more intractable,” ASP had warned. “It can add a layer of government instability and economic challenges to already existing internal threats. For that reason, policymakers should acknowledge that money could solve some problems, while reform and foresight must be used to prevent others.”

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