With volatility in global oil prices and a high degree of uncertainty about the long-term value of these resources, UK-based global consultancy group, Wood Mackenzie says rapid development of Guyana’s oil fields will maximise benefits to the South American country.
The industry analyst expects that by 2025, oil revenues will triple GDP in the country. One of the main goals, WoodMac says, is to anticipate oil revenues in the context of the timeliness needed to develop these resources.
“People have borne in mind the timeliness needed to develop these resources so they always question what will be the value of these resources if oil is still in the ground in fifteen years from now. So, bringing the oil revenues in earlier and then using it to diversify the economy and also to provide the country with cheaper energy – I think these are two of the key goals,” says Luiz Hayum, Senior Analyst at Wood Mackenzie’s Latin America Upstream Research team.
Hayum says the establishment of a Sovereign Wealth Fund – which Guyana calls Natural Resources Fund – at an early stage is a positive development that can help with the effective management of oil revenue. On January 23 the country’s President, David Granger, signed the Natural Resources Fund into law, paving the way for its operationalization; a process that is ongoing.
“There’s…a positive start – building a sovereign wealth fund from the beginning. But then the challenge will be how – with very limited resources, with regulatory entities and government bodies still growing on their own and increasing their structure – how they will create a solid plan and deploy this plan in the future years. I think this will be the key challenge – managing and deploying well, all these oil revenues,” Hayum said.
ExxonMobil is pulling out all stops on its Guyana development in what WoodMac has said is a ramp-up faster than anything ever achieved in the industry with potential to exceed 1 million barrels per day at peak.
Wood Mack’s Chairman and Chief Analyst, Simon Flowers has said few countries produce more than 1 million b/d. Outside of OPEC they can be counted on two hands: Canada, USA and Mexico; UK and Norway; China, Brazil and Oman; Russia and most recently Kazakhstan – the only new member in the 21st century. New admissions to the group, he said, don’t happen very often. “Guyana, with no upstream oil industry four years ago, has a very good chance of joining this elite group,” Flowers pointed out.
Already, Norway-based energy research and business intelligence company, Rystad Energy, has said Guyana’s total estimated income from the 13 discoveries made so far by ExxonMobil at the Stabroek Block is now projected at 117.5 billion US dollars. This excludes other potential discoveries on the block and does not include oil strikes, such as Tullow’s recent discovery, made outside Stabroek.
