Guyana, home to one of the most prolific and promising oil discoveries in recent years, is not interested in joining OPEC.
The small South American nation of 800,000 residents bordering OPEC founding member Venezuela wants to pump as much crude oil as soon as possible, to take advantage of the still growing global oil demand this decade and boost its economy and build infrastructure thanks to the huge oil revenues.
So it is not surprising that Guyana doesn’t want to be officially a part of OPEC, where it would be strong-armed into reducing production in concert with other members of the cartel and the wider OPEC+ group to prop up oil prices.
Guyana’s goal is to maximize its huge oil discoveries and open acreage to more exploration in the hope that operators would replicate ExxonMobil’s success of finding billions of barrels of oil equivalent offshore the country.
OPEC is looking to bring Guyana into the fold, The Wall Street Journal reported this week.
However, Guyana isn’t joining the cartel, its Vice President Bharrat Jagdeo says.
“Right now, the idea is to get as much of these resources out of the ground as quickly as possible given that we are not sure of the window we have in the future,” Jagdeo told the Journal.
OPEC itself refuted the reports that it had invited Guyana to become a member.
“While the Organization recognizes that Guyana is an emerging player in the international oil market with significant potential, OPEC has not invited Guyana to become a Member of the Organization,” the cartel said.
Indeed, Guyana has a huge potential to boost its oil production this decade.
It became the newest oil-producing country in the world in 2019 after ExxonMobil and its partner Hess Corp began production from the Stabroek block, where the companies have found more than 11 billion barrels of oil equivalent to date.
Currently, Guyana produces around 380,000 barrels per day (bpd) of crude oil, all from Exxon-operated wells. And it looks to triple that production and pump 1.2 million bpd by 2027.
The government of Guyana wants to welcome more foreign operators to its already booming oil industry and economy and will hold its first-ever offshore licensing round in the middle of August as it finalizes a new model for Production and Sharing Agreements (PSA) and regulations that go with it.
Supermajors Shell and Chevron, as well as Brazil’s state oil firm Petrobras, are reportedly among the ten companies considering bidding in the licensing round.
Guyana, together with the United States and Brazil, is expected to lead oil production growth and capacity expansions from producers outside OPEC and the OPEC+ alliance this decade, the International Energy Agency (IEA) said in its annual Oil 2023 report with projections to 2028.
Medium-term capacity expansion plans are expected to lead to a 5.1 million bpd supply boost from non-OPEC+ producers by 2028, with this increase led by the United States, Brazil, and Guyana.
In comparison, all 23 current OPEC+ members will see a net capacity gain of 800,000 bpd by 2028, with capacity expansions in the biggest Middle Eastern producers – Saudi Arabia, Iraq, and the United Arab Emirates (UAE) – offset by declines in Russia, Africa, and Asia, the IEA said.
As Guyana’s production grows, the country will become an increasingly influential market force outside OPEC’s control. But the Latin American country wants to generate oil revenues while it still can and capture a larger share of the market while global oil demand is still growing.
“It sounds a bit crude to say our depletion policy is to get as much oil out of the ground as quickly as possible,” Vice President Jagdeo told the Journal.
“We don’t want to be part of OPEC at this point in time.”
By Tsvetana Paraskova for Oilprice.com
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