Even with plummeting demand due to the global pandemic and the move towards renewables, experts believe that oil and gas will still remain the primary source of energy in the years to come, which is good news for new oil producer Guyana, now at the start of a journey to develop its multi-billion-barrel oil resources.
According to the International Energy Agency’s (IEA) Sustainable Development Scenario, published recently in its 2020 World Energy Outlook, oil and gas will meet 46 percent of the global energy demand in 2040.
Commenting on this projection, Gordon Ballard, Executive Director of the International Association of Oil and Gas Producers, said petroleum as a source of energy will remain pivotal to the global economy in coming years. “Oil and gas remain the backbone of global energy supply,” he said.
The Organization of the Petroleum Exporting Countries (OPEC) said in its latest annual World Oil Outlook that global oil demand will peak in about 20 years. The oil cartel estimated that global demand would hit 109.3 million b/d in 2040 before declining to 109.1 million b/d in 2045 and plateauing over a relatively long period.
Recognizing there is a window for oil and gas demand, Ballard said, “…the energy landscape is changing and so is the oil and gas industry…Whilst helping satisfy the global hunger for energy, we are also taking responsibility for a more sustainable energy future.”
Over the past few months, some of the world’s largest oil and gas companies have disclosed plans to make a considerable shift towards renewables, a path that has been resisted for years due to the sheer unattractiveness of the returns.
Shell is looking to slash up to 40 percent off the cost of producing oil and gas while Chevron, Total and British Petroleum have committed to accelerate their movement towards renewables.
“Choices to shift away from oil and gas production leave relatively more opportunities for others, like those in Guyana,” said Dr. Dean Foreman, Chief Economist at the American Petroleum Institute (API). “And keep in mind that the natural decline of global oil production necessitates large investments just to sustain current levels, which also furthers opportunities for producers that stay the course.”
With over 8 billion barrels of oil equivalent discovered across 18 discoveries at the Stabroek Block to date and just three approved developments, Guyana still has significant hydrocarbon resources yet to be produced. More oil will also be found.
ExxonMobil is targeting five offshore developments in the South American country by 2026 which it says are expected to produce upwards of 750,000 bpd. So far, its first development at the Liza field has started with phase 2 targeted for 2022 and a third project at Payara expected to start up by 2024.