With Europe scrambling for alternative energy sources in wake of the Russia-Ukraine war, Guyana’s light, sweet crude has assumed greater importance to the continent’s consumers.
This was discussed by Scott B. MacDonald, Chief Economist for Smith’s Research & Gradings, and Research Fellow with Global Americans, in an OilNOW column.
Guyana, he said, exported 116,900 barrels of oil per day (bpd) of crude in 2021, most being sold to Asian countries, including China and India, while shipments to Europe accounted for around 16% of the total.
But in 2022, the Research Fellow said that the dynamic radically changed. While Asian buyers remain important, he said “Europe has assumed the lion’s share of buying of Guyanese crude.”
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From January to early September, the Chief Economist said it is estimated that cargoes to Europe, averaging 110,000 bpd, accounted for 49% of the Caribbean country’s oil exports. It is expected that Guyana could hit 380,000 bpd on average by the end of the year with Europe continuing to be a major buyer.
The Chief Economist wrote that the shift away from Russian energy is a disjointing affair, leaving Europe looking to accelerate its transition to renewables. MacDonald said the problem is that renewables come up short for Europe’s energy demands, especially over what could be a critical next several months. He said Europe is relying more on coal (especially in Germany) and considering new projects.
Guyana’s crude he posited, serves as a perfect response for Europe’s conundrum since it is also the right type its consumers need, specifically, the medium- to light-sweet oil called Liza Crude (named after the offshore field) and an even lighter grade, Unity Gold.
He also noted that Guyana, in comparison to other nations, is also lower on the political risk side, thereby making it more desirable than others. MacDonald said Libya is caught in a multi-year civil war, Iranian and Venezuelan oil sales are complicated by economic sanctions, and Nigeria’s natural gas pipelines are frequently victims of theft and vandalism. Guyana has no such problems.
Considering the foregoing, along with Europe’s hastened march toward energy security, MacDonald said Guyana would no doubt increase as a strategic interest for the continent.
