Even as a robust global vaccination programme is rolled out for COVID-19, new variants such as delta are threatening another round of lockdowns. This could put a dent in the gradual recovery seen in oil demand in recent months. The fall in oil prices over the last year has resulted in a decline in investments in exploration and production, and in some cases, companies have even been forced to shut-in operations.
However, in Guyana – South America’s newest oil producer – the offshore activities, particularly at the Stabroek Block where U.S. oil major ExxonMobil is operator, have remained resilient.
Consultancy group Rystad Energy said long term supply sources for oil will come from offshore provinces like Guyana since a combination of factors exist such as low breakeven cost and competitive fiscal regimes that serve to incentivize production.
“So, it makes the IOR on these projects high enough that these projects kind of continue,” Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean told OilNOW in a recent interview. “The other thing that offshore provinces have at play is that you’re usually talking about huge reserves and assets that will produce for 30 years or more.”
Since 2015, Exxon has found more than 9 billion barrels of oil equivalent spread across 22 discoveries at Stabroek Block where significant yet-to-be discovered resources remain.
“So, when I think about the 2050 supply table and who is able to kind of sit there, it’s these low breakeven, good IOR projects that have the length and the longevity to produce for 30 years,” Parker pointed out. He said offshore Guyana and Brazil’s presalt are two places where those conditions are both necessary and sufficient.
“Then of course, the ability to operate during COVID I think has to do as much with the government as the operator,” Parker stated. He said different governments around the world took different positions as to how to allow workers into the country and what workers had to do upon entering and leaving.
“I think that Guyana to a certain extent helped facilitate the ease of doing business in their coronavirus response,” he said.
The offshore activity in the South American country continues in earnest with Exxon targeting 12 to 15 wells this year and other companies such as CGX Energy preparing to undertake drill campaigns.