DATE: July 21, 2022
The presentation, by Rystad’s Head of Latin America, Schreiner Parker, explores recent developments in Guyana’s oil and gas industry. Parker reports on what has been done so far in governance and identifies what still needs to be implemented to maximize Guyana’s benefits. The report examines how Guyana’s oil and gas industry can compete in a world transitioning from fossil fuels; Guyana’s exploration success and future developments; the long-term sustainability of Guyana’s deepwater oil & gas; value creation for government and companies; and Guyana’s governance of natural resources and its development.
(i) Government Take
- The report finds that 2022 is a landmark year for Guyana – with government revenues from oil production forecasted to potentially reach as high as US $1.5 Bn and an average of $3.6 Bn per annum through 2030 (and $12.4 Bn annually between 2031 and 2040). Rystad forecasts the government take to peak at $16 Bn per year in 2036. Cumulatively, this amounts to roughly $157 Bn in government take for Guyana by 2040.
- Guyana’s government take (including royalties and profit sharing) is competitive with other frontier and non-frontier regions with an overall take of 59%, including profit sharing and royalties, compared to 47% in Suriname. Guyana also ranked higher than the peer group average of 54%.
(ii) Emissions & the Energy Transition
- The emissions intensity of Guyana’s production is nine kgCO2/boe–half of the global average and able to outperform ~75% of global producing assets. This is due to several factors, including larger-scale developments with fewer wells with high rates of productivity, more specialized technical solutions to limit emissions, such as gas reinjection, and more stringent regulations.
- Guyana offshore is also one of the most resilient segments under carbon tax scenarios. With taxes of US$50 per tonne, US$100 per tonne, and US$200 per tonne, Guyana’s average breakeven remains resilient due to lower relative carbon intensity compared to other sources.
(iii) Role in Global Discoveries
- Guyana has led in offshore discoveries since 2015 with 11.2 billion boe, accounting for 18% of discovered resources and 32% of discovered oil.
- Guyana has accounted for 18 of the top 30 largest offshore oil discoveriesglobally since 2015.
- Guyana is one of the most competitive supply sources outside of core Middle East and offshore Norway production, beating out the Permian, Russia, and many other offshore sources under various commodity price scenarios, with an overall liquid breakeven of $28.0/bbl. (including future developments)
- Rystad expects substantial improvements in transparency as new legislation comes into effect. The country is implementing new governance mechanisms and institutions based on global standards and best practices to manage its natural resource wealth, including passage of NRF Act 2019 and amendment in 2021 and passage of Local Content Act 2021 and operationalizing of the Local Content Secretariat, but more remains to be done.
Terrence Blackman, Ph.D.
Full presentation here
Schreiner Parker, Senior Vice President & Head of Latin America, Rystad Energy
“Guyana’s emissions intensity is only half of the global average…Guyana’s emission intensity for producing assets actually outperforms almost 75% of global performing assets. This is significant and very important in terms of being part of that supply source in the long term.”
“If we fast forward to 2035, Guyana becomes the fourth largest offshore oil producer in the world at 1.7 million barrels per day of production outpacing traditional offshore provinces like Norway, the United States, the United Kingdom and Mexico.”
“Guyana will go from a frontier exploration player to a top five global exploration producer in the next five years.”
“Guyana is very well positioned in the government take aspect and actually higher at 59% than the average for the peer group being 54%… The Guyana government take, which we estimate will reach $7.5 billion per year by 2030, and again that $157 billion by 2040 cumulative. It is important to note that in these estimates we are only talking about the Stabroek Block.”
“Guyana has an oil industry that is sort of less than ten years old and yet it is scoring materially higher than Mexico, who has an oil and gas industry that is more than 100 years old. So I think what we can really show here is that Guyana is taking the right steps to ensure that good governance is a staple of the development of the oil and gas industry and that the benefits of this resource will go to the Guyanese population who are, at the end of the day, the rightful owners of this resource.”
Joel Bhagwandin, Director Corporate Finance Advisory | SPHEREX Analytics SPHEREX Professional Services Inc.
“The story is essentially the same, which is the government essentially will earn more in terms of profit and royalties versus the oil companies (regardless of approach between looking at all of Stabroek Block or just the four approved projects).”
“In the area of transparency I would say, in the circumstance given our situation, we are doing fairly well. The production sharing agreement is a public document, the production sharing agreements of other exploration that are ongoing with other companies are public documents.”
Arthur Deakin, Energy Practice Co-Director, American Market Intelligence
“If it (associated gas) is 20% of the 11 billion barrels of oil equivalent that have been discovered that would equal, more or less by our calculations, 13.2 billion cubic feet of associated gas which would make Guyana have the third largest gas reserves in Latin America, behind Venezuela and Argentina.”
“These (infrastructure) projects have been part of the plan for many decades, but now that Guyana actually has the money, or has the money coming in, it’s really time to implement it.”
Founder, Guyana Business Journal
Vice President, Manchester Trade Ltd. Inc. & Co-Chair and Fellow, Caribbean Policy Consortium
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THE GUYANA BUSINESS JOURNAL & THE CARIBBEAN POLICY CONSORTIUM are dedicated to exploring and understanding the Guyanese and Caribbean economy’s key issues and developing concrete policy proposals supporting the region’s socio-economic and political development.
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