Wednesday, February 1, 2023

Guyana can become key player on global oil market with increased production – API’s Chief Economist

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With Guyana expected to produce more than 800,000 barrels of oil per day by 2025, experts say that the country can become a key producer in creating global oil market balance as the demand grows and supply shrinks.

Chief Economist at the American Petroleum Institute (API), Dr. Dean Foreman, during a webinar hosted by the Centre for Local Business Development (CLBD) on Thursday, said the shutdown of economies around the world during the onset of the COVID-19 pandemic, drastically affected the oil sector.  With the sector still trying to recover, he said that the global oil demand has continued to rebound and could reach new heights in 2022 and beyond.

The Economist noted that based on studies, the first quarter of 2021 has seen a lowly US$38B investment in the global oil and gas sector when compared to $65B per quarter in 2019. Despite the projected OPEC+ and United States supply increases, the Energy Information Administration (EIA) expects that global oil demand could continue to exceed supply through 2021. This can lead to the rise of oil prices to about US$60 per barrel in 2022.

However, with Guyana ramping up its production, Dr. Foreman said the country stands to significantly benefit from this.

“Guyana has an opportunity to plug and play directly into the global oil market. Guyana is coming at a perfect time where there is a need for these barrels. There is a recovering global demand on the economy [and Guyana has] the ability with a medium weight, medium gravity, relatively light sweet crude oil, which will help refiners in Europe, North America and Asia,” he said. “So, you have broad appeal, and it seems like it is an opportunity for the nation if it can continue to stay on a sustainable path to continue to incentivise further growth with the additional oil finds…So, with this progress, you expect that it is a tremendous opportunity.”

When ExxonMobil’s Yellowtail Development Project at the Stabroek Block comes on stream in 2025, it will add 250,000 bpd to the 120,000 bpd from Liza Phase 1, 220,000 bpd from Phase 2 of the Liza Development and 220,000 bpd from Payara.

Dr. Foreman noted that in addition to creating a global balance, Guyana stands to benefit from transformation development with the revenues it will earn, if it is prudently managed.

“Really, that brings a huge responsibility and challenges but managing that is a good problem to have because it is a path that can transform a nation and provide its population with just tremendous changes, economic stimulus, educational opportunities, I think, right through the entire value chain,” he posited.

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