Guyanese Growing Pains
The world’s newest major oil producer is growing by leaps and bounds, but its historic success has sown the seeds of both geopolitical and corporate conflict.
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The oil market’s newest major exporter is booming, with Guyanese crude production is now roughly 50% higher vs. this time last year and en route to reach 1.2 MMbpd by 2027.
The broader Guyanese economy has doubled over the past two years, growing by nearly 40% last year following a 62% increase the year before.
Alongside this growth has come diversification of Guyana’s export partners, with boosted production increasingly heading towards Asia in addition to Guyana’s pre-existing European market.
But the heady success has sown the seeds of conflict, both corporate and geopolitical, and while this conflict isn’t likely to materially dislodge the growth trajectory, it will keep Guyana in the headlines and heighten perceptions of related risk.
Neighbouring Venezuela has stoked concern regarding its increasingly bellicose rhetoric around its territorial claims in Guyana, which cover the large portion of Guyana including virtually all its prolific offshore territory.
The 30% stake in the prized Stabroek block held by Hess Corp has also become a major sticking point in Chevron’s proposed $53bn acquisition of the company, with block operator ExxonMobil insisting it holds a right of first refusal on the stake.
Guyana, the world’s newest major oil exporter, continues to grow its production by leaps and bounds, recently celebrating first oil from its third offshore project. In just a year, production has risen more than 50%, to roughly 650 kbpd today, and the tiny South American producer is already ahead of fully 9 current members of OPEC+ and on par with long-time producers like neighbouring Venezuela. And we’re still in the early days, current plans have production at 1.2 MMbpd by the end of 2027 and this is, surely, just the beginning of what is coming down the pipe.
But potential challenges are lurking beneath the proverbial waters and keeping the new producer country in global headlines. On one hand, the broader Guyanese economy has doubled over the past two years, growing by nearly 40% last year following a 62% increase the year before. One the other, geopolitical and corporate conflicts have arisen: neighbouring Venezuela’s intensifying border bellicosity and the acquisition dispute between the joint owners of the exclusive right to operate in the Stabroek block.
Let’s review the progress and the potential challenges unfolding for Guyana’s booming oil industry.