It is estimated that by the mid-2020s to 2030, oil production in Guyana could hit 700,000 to 750,000 barrels per day but this figure may ‘underestimate the country’s production’ says the American Security Project (ASP).
In a report released on Thursday, October 18 in Washington, DC, 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.
After production starts in 2020, Rystad Energy estimates that output will swiftly rise to over 100 thousand barrels per day by 2022. If all goes smoothly in permitting and production, output could rise to over 700,000 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: Tullow Oil, for example, is preparing to start drilling in its Orinduik license plot, which neighbors the Stabroek,” ASP pointed out.
With Guyana’s small population of less than 1 million 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 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 warned in its report. “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.”
The ASP-led discussion on Thursday in Washington, DC focused on the geopolitical challenges and opportunities presented by Guyana’s coming oil boom and why American policymakers should be interested in what is unfolding in the lone English-speaking country on the South American continent.
Presenters at Thursday’s event included Andrew Holland, Vice Admiral Kevin Green – ASP advisor, Sonya Boodoo – Senior Analyst at Rystad Energy and Lisa Viscidi – Director of the Energy, Climate Change and Extractive Industries Programme at the Inter-American dialogue.