Could Guyana Replace Venezuela As A Regional Oil Giant?

Guyana is continuing to build its reputation as the new oil hub of the Americas, with more oil firms seeking a stake in the country’s oil fields where it seems new discoveries are being made almost every month as exploration activities continue.

International oil giants Hess, CNOOC, and ExxonMobil all have a stake in Guyana’s Stabroek Block where the firms have made significant discoveries over the last five years. Exxon alone claims to have made 20 discoveries, expected to contain around nine billion barrels of recoverable oil equivalent resources. 

Eco-Atlantic is the latest oil firm to join the major players, acquiring a stake in JHI Associates and taking its share in the Canje block off the coast of Guyana, where Exxon operates. 

A 2021 multi-well exploration program will develop upon activities in the Canje Block to see how far the region’s hydrocarbon system extends. The low-risk drilling project could provide greater insight into the extent of Guyana’s oil reserves.

Eco has stated, "This transaction will increase Eco Atlantic's presence in the Guyana-Suriname basin to include a three-well drilling programme, with the first two firm wells on the Canje Block drilling in 2021 and at least one on the Orinduik Block, subject to partner approval."

This will develop upon Exxon’s discovery last month at Longtail-3 in the Stabroek Block. The firm found newly identified, high-quality hydrocarbon-bearing reservoirs underneath the original Longtail-1 discovery intervals.

Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil explains, “Longtail-3, combined with our recent discovery at Uaru-2, has the potential to increase our resource estimate within the Stabroek block, demonstrating further growth of this world-class resource and our high-potential development opportunities offshore Guyana.” 

To speed up exploration and evaluation activities this year, in line with the increasing global oil demand, Exxon has launched two additional drillships, Stena DrillMAX and the Noble Sam Croft. 

Guyana can expect an anticipated oil output of 1.2 million bpd by 2030, according to estimates. This could lead it to rival neighboring Latin American oil giant Venezuela, whose oil industry has suffered significantly due to U.S. sanctions on production and exports. 

The country is now beginning to develop partnerships with the world’s growing oil markets, sending its first oil shipment to India this month as ‘trial cargo’. Guyana will ship 1 million barrels of its Liza light sweet crude via Greece, expected to arrive at India's Paradip port around 8th August. 

Since OPEC imposed restrictions on oil production earlier this year, driving up oil prices, India has been looking to diversify its oil imports. 

India’s Oil Minister Dharmendra Pradhan made it clear that India’s priority for its energy imports was competitive pricing, and if OPEC+ couldn’t provide this, the huge Indian market would look elsewhere. Indian officials are now said to be in talks with Guyana’s government over a potential longer-term oil contract. 

Indian Oil Corp (IOC) is the refiner testing this first cargo shipment, which could lead the way for the new South American oil region to expand its export market to Asia. With India importing around 80 percent of its oil needs, it has become a key market for many of the world’s oil producers. 

As Guyana’s oil industry goes from strength to strength and large oil markets look to diversify their imports, the small South American state could soon become one of the major players.

By Felicity Bradstock for Oilprice.com

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