Petroleum industry in Guyana

Last updated

Petroleum industry in Guyana is rapidly evolving. Guyana has emerged as one of the newest petroleum producing regions in the world, achieving its first commercial grade crude oil draw in December 2019. Crude oil is sent abroad for refining. [1] [2]

Contents

Since the onset of production, Guyana has experienced a rapid increase in oil output, with production levels reaching approximately 660,000 barrels per day by 2024. [3] With plans to further increase production to about 1.3 million barrels per day by 2027, Guyana is set to significantly expand its influence in the global oil market, presenting new economic opportunities and challenges for the country. [4]

In 2022 in Guyana was launched petroleum training facility, [5] Investments in staff training amounted to 20 million US dollars. This training centre is located in East Coast Demerara. [6] In December 2024, Guyana became the third highest per capita petroleum producing country in the world. [7]

Early Explorations

Historically, Guyana was a net importer of fuel. [8] Guyana's offshore Guyana Basin and the inland Takatu Basin have attracted foreign companies such as Shell, Total and Mobil since the 1940s, who completed much geological surveyance of the area and drilled a number of wells. [9] In the Takatu Basin, 3 wells were drilled between 1981 and 1993, however they were dry or not found to be commercially viable. [10]

Offshore oil exploration began in the 1950s, and 9 wells were drilled between 1965 and 1970, only one of which struck oil, Abary-1 well in the Kanuku  license area. In the late 1980s, Mobil, Total, Guyana Exploration and BHP continued exploration in the region. [10]

In the mid-2000s, CGX Energy attempted to spud a well but the rig was deterred by Surinamese gunboats claiming they were in Surinamese waters. United Nations International Tribunal for the Law of the Sea (ITLOS) determined the exact borders in September 2007 but no further wells were drilled until 2012.

As of 2020, Guyana has nine petroleum blocks under active leases, of which six have had active exploration. [10] The Petroleum Division of the Guyana Geology and Mines Commission has the responsibility of monitoring exploration in Guyana.

Discoveries by ExxonMobil

Operating and proposed projects in the Stabroek block Guyana's offshore mineral exploration blocks, producing vessels, and proposed projects in the Stabroek block (May 2024) (53736542101).png
Operating and proposed projects in the Stabroek block

Esso, a subsidiary of ExxonMobil, began exploring the off-shore region in 2008. [10] In May 2015 ExxonMobil announced discovery of more than 90 metres of high-quality, oil-bearing sandstone reservoirs about 200 km off the coastline, [11] considered to be one of the largest crude oil discoveries of the past decade. [12] The Liza-1 well was drilled to 5,433 metres in 1,742 metres of water, and was the first well on the Stabroek block, which is 26,800 square kilometres in size. Early estimates claimed the area contained 700 million barrels of oil (a total value of US$40 billion, international crude price at the time of discovery).

As of March 2024, more than 30 discoveries of oil and gas have been made offshore Guyana. [13] As of May 2024, ExxonMobil estimated its discoveries totaled 11 billion barrels of oil equivalent. [14]

Liza Phase 1 project in the Stabroek block began producing crude 20 December 2019. [15] Two more projects began producing in February 2022 [16] and November 2023. [17]

Challenges

Predictions about the windfall of this significant oil discovery made a significant impact on the country, including the 2020 presidential elections. [18] There is also the threat of the oil curse, which affects similar resource-rich countries. [19]

There are also concerns of large international companies getting an unfair share of ownership of oil royalties. [20] [21] [22] Natural-resources watchdog group, Global Witness, reported that Guyana may have lost as much as $55 billion in potential revenue from negotiations that favored Exxon. Exxon refuted the claim based on unaccounted for costs of the high risk involved in exploring the "frontier hydrocarbon province". [23] Global Witness withdrew its report in January 2021, redirecting its efforts to focus on fighting climate change. [24]

Guyana announced new model petroleum contracts in 2022 to increase its share of revenue from oil production. The new contracts added a corporate tax and increased the royalty rate. However, the new terms do not apply to ExxonMobil's Stabroek Block, where all current crude oil production occurs. [25]

Border Dispute with Venezuela

The oil and gas exploration activity by Guyana created a new source of tension with neighboring Venezuela. The 2015 discovery set off a round of recriminations between Venezuela and its eastern border neighbor. Officials in Caracas, which has long had claims on Guyana's Essequibo region, have alleged that the concession is located in disputed waters.[ citation needed ] This wasn't the first off-shore border dispute, as then-President Burnham had addressed the United Nations in 1968 over Venezuelan claims of area up to 12 miles from disputed territories. Prior to this, a border award was agreed upon in 1899 as the result of a case overseen by U.S. Chief Justice Melville Fuller, however in 1954 a memorandum by one of the lawyers was published posthumously, questioning the validity of the award as unfairly to the benefit of British Guiana. [26]

Regulation

Petroleum (Exploration and Production) Act 1986 (PEPA) detailed the State's main regulatory power in granting licenses for petroleum prospecting and production. [10] It was repealed and replaced by the Petroleum Activities Act 2023, in an effort by government to modernize the management of the Petroleum sector.

Natural Resource Fund Act 2019 established a fund for government proceeds from petroleum operations, to be operated by the Bank of Guyana. [27] A different administration overhauled the legislation with the Natural Resource Fund Act 2021, arguing it was necessary to ensure transparency and accountability.

The Local Content Act 2021 was also passed to require contractors to procure goods and services from Guyanese companies and nationals. [28] ExxonMobil and its partners increased spending on Guyanese suppliers by an annual average of 80% in the 2017-2023 period.

Related Research Articles

<span class="mw-page-title-main">North Sea oil</span> Hydrocarbons from the North Sea

North Sea oil is a mixture of hydrocarbons, comprising liquid petroleum and natural gas, produced from petroleum reservoirs beneath the North Sea.

<span class="mw-page-title-main">Sonatrach</span> Oil and gas company of Algeria

Sonatrach is the national state-owned oil company of Algeria. Founded in 1963, it is known today to be the largest company in Africa with 154 subsidiaries, and often referred as the first African oil "major". In 2021, Sonatrach was the seventh largest gas company in the world.

The oil and gas industry is usually divided into three major sectors: upstream, midstream and downstream. The upstream sector includes searching for potential underground or underwater crude oil and natural gas fields, drilling exploratory wells, and subsequently operating the wells that recover and bring the crude oil or raw natural gas to the surface.

<span class="mw-page-title-main">China National Petroleum Corporation</span> Chinese major national oil and gas corporation

The China National Petroleum Corporation (CNPC) is a major national oil and gas corporation of China and one of the largest integrated energy groups in the world. Its headquarters are in Dongcheng District, Beijing. CNPC was ranked fourth in 2022 Fortune Global 500, a global ranking of the largest corporations by revenue.

The Superior Oil Company was an American oil company founded in 1921 in Coalinga, California, by William Myron Keck, Superior Oil began as a drilling contracting firm and grew into the exploration and production of oil and natural gas. In 1930 the company was the first to successfully use directional drilling in California. Moving to Houston, Texas.

<span class="mw-page-title-main">APA Corporation</span> American energy company

APA Corporation is the holding company for Apache Corporation, an American company engaged in hydrocarbon exploration. It is organized in Delaware and headquartered in Houston. The company is ranked 431st on the Fortune 500.

Azeri–Chirag–Gunashli or Azeri–Chirag–Deepwater Gunashli is a complex of oil fields in the Caspian Sea, about 120 kilometres (75 mi) off the coast of Azerbaijan. It consists of the Azeri and Chirag oil fields, and the deepwater portion of the Gunashli oil field. An overall estimate of the area of the development is 432.4 square kilometres (167.0 sq mi). It is developed by the Azerbaijan International Operating Company, a consortium of international oil companies, and operated by BP on behalf of the consortium. The ACG fields have estimated recoverable reserves of about 5 to 6 billion barrels of petroleum. Peak oil production of 885,000 barrels per day (140,700 m3/d) was reached in 2010. However by the first quarter of 2024 production had fallen to 339,000 barrels per day (53,900 m3/d), or approximately one-third of peak value, as the development continued terminal decline. As of 2021, ACG oil accounted for 95% of all Azerbaijani oil exports.

ExxonMobil has offshore oil production in Nigeria, and is the country's second largest crude oil producer. Mobil Producing Nigeria (MPN) began shallow water operations in 1955, and owns over 90 platforms and 300 producing wells covering 3,200 square kilometres.

<span class="mw-page-title-main">Petroleum exploration in the Arctic</span> Industry in the Arctic

Exploration for petroleum in the Arctic is expensive and challenging both technically and logistically. In the offshore, sea ice can be a major factor. There have been many discoveries of oil and gas in the several Arctic basins that have seen extensive exploration over past decades but distance from existing infrastructure has often deterred development. Development and production operations in the Arctic offshore as a result of exploration have been limited, with the exception of the Barents and Norwegian seas. In Alaska, exploration subsequent to the discovery of the Prudhoe Bay oilfield has focussed on the onshore and shallow coastal waters.

<span class="mw-page-title-main">QatarEnergy</span> Qatari state-owned oil company

QatarEnergy, formerly Qatar Petroleum (QP), is a state owned petroleum company of Qatar. The company operates all oil and gas activities in Qatar, including exploration, production, refining, transport, and storage. The President & CEO is Saad Sherida al-Kaabi, Minister of State for Energy Affairs. The company's operations are directly linked with state planning agencies, regulatory authorities, and policy making bodies. Together, revenues from oil and natural gas amount to 60% of the country's GDP. As of 2018 it was the third largest oil company in the world by oil and gas reserves. In 2022, the company had total revenues of US$52bn, a net income of US42.4bn, and total assets of US$162bn. In 2021, QatarEnergy was the fifth largest gas company in the world.

<span class="mw-page-title-main">History of the petroleum industry in Canada (frontier exploration and development)</span>

Canada's early petroleum discoveries took place near population centres or along lines of penetration into the frontier.

Prudhoe Bay Oil Field is a large oil field on Alaska's North Slope. It is the largest oil field in North America, covering 213,543 acres (86,418 ha) and originally contained approximately 25 billion barrels (4.0×109 m3) of oil. The amount of recoverable oil in the field is more than double that of the next largest field in the United States by acreage (the East Texas Oil Field), while the largest by reserves is the Permian Basin (North America). The field was operated by BP; partners were ExxonMobil and ConocoPhillips until August 2019; when BP sold all its Alaska assets to Hilcorp.

<span class="mw-page-title-main">Oil reserves in Ghana</span> Oil reserves located in Ghana

The petroleum industry of Ghana is regulated by the state-owned Ghana National Petroleum Corporation (GNPC) and administered by the state-owned Ghana Oil Company (GOIL).

<span class="mw-page-title-main">ExxonMobil</span> American multinational oil and gas company

ExxonMobil Corporation is an American multinational oil and gas corporation headquartered in Spring, Texas, a suburb of Houston. Founded as the largest direct successor of John D. Rockefeller's Standard Oil, the modern company was formed in 1999 following the merger of Exxon and Mobil. It is vertically integrated across the entire oil and gas industry, as well as within its chemicals division, which produces plastic, synthetic rubber, and other chemical products. As the largest U.S.-based oil and gas company, ExxonMobil is the seventh-largest company by revenue in the U.S. and 13th-largest in the world. It is the largest investor-owned oil company in the world. Approximately 55.56% of the company's shares are held by institutions, the largest of which as of 2019 were The Vanguard Group (8.15%), BlackRock (6.61%), and State Street Corporation (4.83%).

<span class="mw-page-title-main">Offshore oil and gas in the Gulf of Mexico (United States)</span> Major petroleum-producing area

Offshore oil and gas in the Gulf of Mexico is a major source of oil and natural gas in the United States. The western and central Gulf of Mexico, which includes offshore Texas, Louisiana, Mississippi, and Alabama, is one of the major petroleum-producing areas of the United States. Oil production from US federal waters in the Gulf of Mexico reached an all-time annual high of 1.65 million barrels per day in 2017. Oil production is expected to continue the upward trend in 2018 and 2019, based on ten new oil fields which are planned to start production in those years. According to the Energy Information Administration, "Gulf of Mexico federal offshore oil production accounts for 15% of total U.S. crude oil production and federal offshore natural gas production in the Gulf accounts for 5% of total U.S. dry production."

The oil industry in Poland began at Bóbrka Field in 1853, followed by the first refinery in 1854. Poland was the third most productive region in the world in 1900. It now has only a small, mostly state-owned component, with production from its Permian Basin in the west, small and very old fields in the Carpathians in the south, and offshore in the Baltic Sea. For natural gas the country is almost completely dependent on legacy pipelines from the former Soviet Union.

<span class="mw-page-title-main">Petroleum industry in Chad</span>

Chad maintains sizable reserves of crude oil which, alongside agriculture, makes up the largest share of the landlocked former French colony's export revenue. Producing around 100,000 barrels of oil a day, most of Chad's crude comes from its reserves in the Doba Basin in southern Chad where oil was discovered in the early 1970s by foreign drillers. There is an estimated one billion barrels of oil in Chad, most of it being exploited by hundreds of rigs operated by Western companies such as ExxonMobil and Shell. However, many challenges exist to Chad's petroleum industry including but not limited to corruption, internal conflict, and geography. Since Chad is landlocked, most of Chad's oil exports are transported out of the country by a pipeline that leads to the Cameroonian port city of Kribi. This pipeline, owned by a consortium, has come under fire due to allegations of exploitation by international corruption watchdogs, and Chadian politicians. In addition, environmentalists have voiced their concerns over the pipeline's impact on the natural environment, citing several spills.

In addition to terrestrial oil wells, Canada also extracts oil via offshore drilling.

<span class="mw-page-title-main">Staatsolie Maatschappij Suriname</span> Suriname oil and Gold company

Staatsolie, officially Staatsolie Maatschappij Suriname, is a Surinamese oil and gold company which was established to execute the oil policy which includes exploration, drilling and processing oil. In 2014 Staatsolie expanded its business to gold. Staatsolie is wholly state-owned.

Melinda Janki is a Guyanese lawyer. She was instrumental in writing into Guyana's 1995 constitution the Environmental Protection Act giving its citizens among the strongest protections of any nation, including "the right to an environment that is not harmful to his or her health or well-being."

References

  1. ↑ "Setting up oil refinery in Guyana even less viable now from when study first done". OilNow. 2020-06-25. Retrieved 2020-12-04.
  2. ↑ GTIMES (2019-10-07). "Oil refinery to be completed by next year – GuyEnergy executive". Guyana Times. Retrieved 2020-12-04.
  3. ↑ King, Kemol (2024-10-29). "ExxonMobil Guyana reached new monthly production high in September | OilNOW" . Retrieved 2024-11-25.
  4. ↑ OilNOW (2023-02-09). "A timeline of Exxon's oil development projects in Guyana | OilNOW" . Retrieved 2024-11-25.
  5. ↑ "US$20m petroleum training facility launched". guyanaenergy.gy. Retrieved 2024-11-26.
  6. ↑ Services, 3t Training. "Guyana Training Centre". 3t Training Services. Retrieved 2024-11-26.{{cite web}}: CS1 maint: numeric names: authors list (link)
  7. ↑ https://www.caribbeanlife.com/guyana-now-third-largest-per-capita-oil-producer-in-the-world/
  8. ↑ Espinasa, Ramon (September 2008). "Prospects for the Oil-Importing Countries of the Caribbean" (PDF). core.ac.uk. Inter-American Development Bank. Retrieved 2020-12-04.
  9. ↑ www.guyanaguide.com [usurped]
  10. 1 2 3 4 5 "Traversing a Slippery Slope: Guyana's Oil Opportunity | Publications" (PDF). publications.iadb.org. Retrieved 2020-12-04.
  11. ↑ "Guyana".
  12. ↑ Szczesniak, Philip A. "The Mineral Industry of Guyana, 2016" (PDF). USGS . Retrieved 2020-12-06.
  13. ↑ "ExxonMobil Guyana announces new discovery". ExxonMobil. Retrieved 2024-07-07.
  14. ↑ OilNOW (2024-05-01). "Exxon's 11-billion-barrel Guyana reserve estimate 'hasn't moved' significantly - Country President | OilNOW" . Retrieved 2024-07-07.
  15. ↑ "Historic draw of first oil arrives". Stabroek News. 2019-12-21. Retrieved 2020-12-04.
  16. ↑ "ExxonMobil starts production at Guyana's second offshore development". ExxonMobil. Retrieved 2024-07-07.
  17. ↑ "Payara: Offshore Oil Development in Guyana". ExxonMobil. Retrieved 2024-07-07.
  18. ↑ "Huge oil discovery off Guyana raises the stakes in election fraud case". the Guardian. 2020-06-27. Retrieved 2020-12-04.
  19. ↑ "Will Guyana soon be the richest country in the world?". BBC News. 2019-05-08. Retrieved 2020-12-04.
  20. ↑ "Guyana votes amid high hopes over oil discoveries". BBC News. 2020-03-02. Retrieved 2020-12-04.
  21. ↑ "Hess' confirmation of payment of US$30 million raises serious red flags for Exxon". Stabroek News. 2019-11-22. Retrieved 2020-12-04.
  22. ↑ "The 1999 and 2016 Petroleum Agreements Compared – Annexes". Stabroek News. 2018-03-16. Retrieved 2020-12-04.
  23. ↑ "Watchdog group says Guyana lost billions in Exxon oil deal". AP NEWS. 2020-02-03. Retrieved 2020-12-19.
  24. ↑ OilNOW (2021-01-11). "Global Witness withdraws report on Guyana, cites overestimation of potential economic benefits from oil production | OilNOW" . Retrieved 2024-07-07.
  25. ↑ OilNOW (2022-11-03). "Guyana hikes royalty to 10% in major overhaul of PSA fiscal terms | OilNOW" . Retrieved 2025-01-07.
  26. ↑ Arfeld, George (1968-08-21). "U.S. Caught In The Middle". Santa Cruz Sentinel. Associated Press . Retrieved 2020-12-19.
  27. ↑ "Natural Resource Fund | International Forum of Sovereign Wealth Funds". www.ifswf.org. Retrieved 2020-12-05.
  28. ↑ OilNOW (2021-12-30). "Guyana advances major oil and gas legislation as pandemonium breaks out in Parliament | OilNOW" . Retrieved 2024-07-07.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.