Just over a year since oil production began at the Stabroek block offshore Guyana, the government secured its highest price yet for the export of Liza crude in February, coming in wake of a 12-month period that saw massive oil demand destruction and collapse in prices due to the pandemic-induced global lockdown measures.
Revenues received by Guyana for its February crude export amount to just over US$61 million for around 1 million barrels of crude sold. The $61 per barrel price represents almost double what the country got in May 2020, when the price was in the mid-$30 range. A month before this, U.S. crude plunged deep into negative territory and Brent dropped below $20 per barrel. The remainder of 2020 was spent recovering from that drop as the pandemic destroyed fuel demand around the world.
According to the findings of a Reuters Poll published last month, oil prices will stage a steady recovery this year as vaccines reach more people and speed an economic revival, with further impetus coming from stimulus and output discipline by top crude producers. The survey of 55 participants forecast Brent crude would average $59.07 per barrel in 2021, up from January’s $54.47 forecast.
“Now it means that your fiscal systems have to result in economic projects at $50 on a ‘real’ long-term basis,” Dr. Pedro H. van Meurs said in a presentation last year. “Otherwise, you will not receive much interest [from] investors. And, consequently, my suggestion is that the governments analyze their fiscal terms at a $50 price and probably around $20 cost and if it doesn’t result in economic projects then you have to adjust your fiscal terms downward to make sure that projects are economic, in case you want to make sure that your acreage attracts interest from investors.”
Production in Guyana at the Liza Phase 1 Development remains robust at around 120,000 bpd, despite some recent challenges with a gas compressor onboard the Liza Destiny FPSO. The equipment has been repaired in Germany and is expected to be returned soon
“So even if oil prices would stay at fifty dollars, this relatively high-cost resources that Guyana have it is still economic to produce these resources and that is proven by the great interest of the oil companies to develop those resources,” he said. “So, for the moment, if we believe the low oil prices are here to stay, the system of Guyana is actually perfect for the conditions.”
Output from the South American country will surpass the 500,000-bpd mark by 2025 and is expected to help full the global supply gap and eventually catapult the country to among the top three Latin America producers by the end of the decade, when production surpasses the 1 million bpd mark.
