Guyana’s Vice President, Dr. Bharrat Jagdeo, said on Friday the country is not in a position to raise the US$9 billion on its own that is required for the Payara development hence the need for investors, and further, moving forward with these projects early will ensure the Guyanese people maximise the benefits from the offshore resources.
“We want this investment to go forward. Guyana, on its own cannot raise US$9 billion, that’s twice the size of our total economy, twice the size of the whole economy on this one investment,” Mr. Jagdeo said. “That’s the size of our Gross Domestic Product…just over US$4 billion. So, we want that because that means we can’t raise the money ourselves, and secondly, we want investments to go ahead because there is a stream of revenue that will come to Guyana in the future for its development.”
The Vice President was at the time briefing reporters on developments in the country’s oil and gas industry and the recent approval of the Payara development, ExxonMobil’s 3rd project offshore the South American country.
Mr. Jagdeo was keen to note that oil and gas investments have all but dried up in many parts of the world, stating that the current and medium-term outlook still remain gloomy.
The largest oil and gas companies in the world, including ExxonMobil, have been revising their long-term oil price and demand outlook and looking to streamline their portfolios to improve cash flow, cost efficiency and competitiveness. Norway-based Rystad Energy said because of this development, billions of dollars in assets will change hands in the coming months.
“Companies will look to expand in the prioritized countries through exploration, acquisitions or asset swaps with other Major+ players,” Rystad Energy said.
The Guyanese Vice President was clear in saying the government intends to ensure investments in the country’s vast offshore resources continue so that the country can accelerate its development and improve the living standards for its people.
“So, I’ll be frank, we want the development and the investments to take place, and they are not taking place in many parts of the world,” he told reporters. “People are cutting back and the only way you can get the oil out is to make the investment and more so now, because there is a short window of opportunity.”
He alluded to the increased movement towards renewables and the potential breakthrough in technology to use these sources for widescale production of power. This, he said, would be devasting to the oil market.
“…many people are banning combustion engines for vehicles so that they would not use fossil fuels anymore,” he said. “So, we want it [oil investments] to go forward, but we also have a duty as the Government of Guyana to protect our people’s interests. So all of those who believe you have great leverage; I have spoken to several people in the industry who believe that the reason why Exxon is here – and we all share this, even the naysayers and those that believe we should go forward – they shared the view that Exxon wants to invest in Guyana because of the quality of the oil and the low breakeven cost to take it out, and they will make money here, given the fiscal conditions too.”
Guyana also stands to rake in billions of dollars in the coming years from development of just the Stabroek resources discovered to date, which currently exceed 8 billion barrels of oil equivalent. A recent analysis from Rystad Energy shows that revenue to Guyana could range from $96 billion dollars at a $40 per barrel oil price, to as much as $310 billion at $80 per barrel.