July 2023 – @marianavargas After Exxon Mobil´s discoveries in the Guyana – Suriname Basin, the South American country came to life. Guyana has become a geostrategic energy player in the region. Considering Trinidad and Colombia´s low running natural gas and oil reserves, besides Venezuela´s unstableness, these two countries are considered two very well located and rich options to invest and develop.
Internally Guyana has been preparing itself for development, making new reforms and reassuring a modern and equal oil sector. In 2022 one of the well- spoken reforms aimed the Starbroek Block, for example, the Production Sharing Agreement (PSA) would include better contract management, and interests of the Guyanese workers would be taken into consideration, as well as benefit and protection.
One of its well known projects (Liza) have been developing quickly and has had positive impact. Liza is one of the first oil discoveries and started production is December of 2019, the 4.4billion dollar investment has a capacity of 120.000 barrels per day.
Besides benefits and reforms, the Guyanese government has made clear it wants to increase oil participation in the country. The recent joint venture deal between Bourbon Marine & Logistics (French Oil and Gas Company) and Tethys Marine and Logistics (Guyanese) demonstrate that the country is accepting new blood and is willing to learn from it, 75% of its directors are Guyanese.
On another hand, the government also seeks to ensure better contracts terms in PSA which is why new contracts will be armed with 10% royalty, 10% corporate tax and 65% cost recovery ceiling, profit oil will be split 50-50. It seems the government is maintaining a firm grip on its sector and is willing to learn from foreign knowledge and at the same time build a national oil empire with no need to nationalize or even think about it.
Guyana keeps on making juicy oil discoveries and at the same time progressing in international affairs; Esequibo reclaims with Venezuela, Commonwealth nation, positioning itself as an international oil player and a hope for many countries that need another oil door to open. Guyana has also been working towards environmental laws, modern approach to the market, seeking development with the International Development Bank and progressively shaping its oil sector.
By the last week of April of the current year Guyana gave Exxon Mobil the green light to start Uaru Project a block that can produce around 812 million barrels of oil (in its 20 years license), 44 wells (21 producers and 23 water and gas injectors). By 2027 we shall see its first oil extraction, boosting this South American country to 1.100.000Bpd, good news for the oil market and good news for a country working towards effective management of oil income, the region may have to learn a thing or two from this oil player.
*Want to know more about Guyanese business and updates in the region? Ask us for our Guyana MultiClient presentation.
