Guyanese economist Bobby Gossai Jr says with the level of investment being made in Guyana’s oil and gas sector and the country becoming the newest oil producer in the region, it is no longer a “small country” but is now a global player.
“I like to say that Guyana is no longer a small country. Guyana is a global player because of the level of investment and the fact that we are a world supplier to markets as far as India, China and the European market supplying light, sweet crude,” he said, speaking on day two of the virtual Aberdeen Guyana Gateway which took place on August 19 and 20, 2020.
He said that his homeland is on a trajectory to double digit growth in 2020 and 2021 as it ramps up oil production even as the country like the rest of the world battles the COVID-19 pandemic.
“Looking at Guyana we expect to see double digit growth rates for this year – somewhere between 25 and 26 percent,” said Gossai Jr. He said that 2021 is expected to be a more robust year of growth as a result of the oil sector, with growth rates of about 18 to 19 percent.
He cited too the five-month long general elections process in Guyana and its impact on the industry, noting some delays in project approvals.
He said it is important to understand what an impact the COVID-19 pandemic had on the economies of the world. “… Guyana has weathered that storm as it has always done due to its diversified economy. Over the next four months there should be some good growth moving forward providing that 2020 doesn’t have other plans for the global economy,” he said.
During his presentation Gossai Jr outlined a number of oil price scenarios: $45 per barrel, $60 per barrel and $35 per barrel, detailing government’s take and the investor returns for each.
“As we can see from the Liza Phase 1, from a $45 price per barrel, Guyana and the investors are making money from 2019. It will peak somewhere around 2024-2025 and then continuously make a positive income for the rest of the period,” he said. He pointed out that the net present value for Stabroek Block seems to be very high, which is good for both government and investor. “This also speaks to the fact that the level of risk for this field is reducing as times goes on,” said Gossai Jr. He gave a profitability window of between $25 per barrel and $62.5 per barrel for the fields in the Stabroek Block.
He noted that Guyana is in a good position to drive future hydrocarbon production due to the consistent exploration success. However, he believes that the government should adjust its fiscal terms for future contracts to better reflect the de-risking of the country’s basin.
Gossai Jr. also called for there to be competitive Bidding and Auctions for other oil blocks both offshore and onshore.
Oil production commenced in Guyana in December 2019 with a daily production rate climbing towards full capacity of 120,000 barrels per day.