TODAY marks one year since the first commercial crude oil was produced from the Liza phase 1 project in the Stabroek block, pushing Guyana to join the ranks of the world’s oil exporters. It was a transformative day, marking the most significant shift in Guyana’s recent history. The Liza Destiny floating, production, storage and offloading (FPSO) vessel is approaching its full production capacity of 120,000 barrels of oil per day and there are plans for several more FPSOs to come on line over the next few years.

Full capacity production is a major milestone for Guyana’s new status as an oil producer. Companies normally ramp up production carefully on new projects. Since August, production at the Liza 1 well has been climbing from around 85,000 barrels of oil per day.

But the transition to full production was not a smooth and easy one. Persistent technical issues with a key gas compressor impacted the ability to compress and re-inject most natural gas back into the ground, resulting in the flaring of more gas than was intended for a longer period of time.

Working with its co-venturers and the Government of Guyana, Exxon chose a middle path that still provided Guyana with revenue while minimising flaring until the equipment issue could be fixed. Once this issue is fixed, the Liza 1 project is expected to continue at or near full production levels for the foreseeable future. All of Exxon’s projects in Guyana have been designed to minimise flaring to a very low pilot flare level once the start-up period is over.

Obviously flaring gas, except in instances when it is necessary for safety reasons, is not something Exxon or other oil companies want to do. In fact, Exxon recently made a commitment to reduce flaring intensity across all its projects around the world by thirty-five percent to forty-five percent by 2025. The company announced that it would also reduce its methane emissions intensity by forty percent to fifty percent by 2025. Both of these measures are consistent with the Paris Climate Accords, which Exxon says it supports and the new Biden administration is expected to rejoin.

Despite the global pandemic that disrupted supply chains and made it tough to fix the equipment issue with the gas compressor, Exxon maintained production at a level that ensures that the government continues to receive millions of US dollars in revenue.

Since first oil production, nearly one year ago, Guyana has collected almost US $150 million from both oil revenues and additional royalties paid by Exxon. Guyana’s Natural Resources Fund stood at almost US $145 million after money from the third oil cargo was deposited. And it is still awaiting revenues from the fourth oil cargo, which was scheduled for mid-November 2020 and is expected to come in at around US $50 million.

Those financial resources could enable the government to launch new social programmes and embark on major campaigns to build infrastructure, develop healthcare and improve education. Revenues could also be used to invest in economic diversification, capacity building and creating new industries to boost development even further.

The slow and safe approach to development in 2020 nonetheless brought big economic growth to Guyana. Guyana is the only Latin American or Caribbean economy expected to expand this year. As of its October 2020 report, the International Monetary Fund expects the country’s economy to grow at over 26 percent year-over-year, while Latin America overall is expected to face a six and a half percent economic contraction.

As production continues to increase for new projects in Guyana’s offshore fields, the country’s revenues and royalties will also continue to increase. Full production from Liza phase 1 will add hundreds of millions more to Guyana’s Natural Resources Fund. It is then up to the government to determine how to best leverage that money to improve the quality of life for Guyanese.

The next two major projects in Guyana, Liza phase 2 and Payara, are expected to make an even bigger difference. These two projects are almost twice as big as Liza phase 1, with production capacities of 220,000 barrels per day each.