New Guyana On The Block
Global oil supply growth depends on one of Latin America’s poorest countries rapidly becoming the world’s largest per-capita crude producer
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A brand new exporter, Guyana represents one of the largest expected sources of global oil supply growth over the next decade as this small Latin American country rapidly becomes the world’s largest per-capita producer.
Guyana’s offshore oil projects utilize state-of-the-art industry technology, have built in low price expectations and cost discipline (breakeven expected between $25-35/bbl), and boast an extremely light upstream emissions footprint.
Deep water offshore oil production began in December 2019 and has risen to more than 360 kbpd as of September; output is expected to rise to 725-1,200 kbpd by 2027, and exploration continues to add new projects to the development pipeline.
US refineries consumed much of the crude from the initial Liza Phase 1 project while the flows from the recently added and much larger Liza Phase 2 project have shifted towards Europe.
Despite the sizable global impact, Guyana’s oil industry will be nothing short of paradigm-shifting for its population and economy; its GDP is set to register average annual growth of more than 25% for the next half-decade and there is great potential to bring substantial domestic power production to the Guyanese mainland.
The global oil industry rarely welcomes a new producer country to its ranks; but, here is Guyana, set to be one of the last true new frontiers of oil supply growth. With the country’s tiny size and previously-acute poverty, Guyana will be an accelerated modern day test of the resource curse, in which an extremely low income country could be suddenly thrust into becoming the world’s top per-capita producer.
And this new supply comes at a critical time, to a sector increasingly defined by underinvestment and sluggish production gains. Indeed, Guyana is anticipated to play an outsized role in near-term global supply growth. Even if you have no interest in Guyana or how the torrent of new oil discoveries will change the lives of its 800,000 citizens, the offshore production assets of this small Latin American country will be one of the largest incremental sources of global oil supplies over the next decade, alongside the US and Brazil. Guyana is expected to grow production by an average of ~200 kbpd every year over the next half-decade, matching the rough pace of growth witnessed in the heyday of the Canadian oil sands’ between 2010 and 2015. In 2022 alone, Guyanese oil production growth is expected to be roughly one-third of what US shale producers managed to grow year-to-date.