As vaccination roll out campaigns continue and the world begins to recover from the COVID-19 pandemic, Guyana is already well positioned to be economically successful in the second half of 2021 and in 2022 due to its quickly growing oil and gas industry. With new oil finds, a second floating production storage and offloading (FPSO) vessel on the way soon, and continued investment efforts both within the oil and gas industry and in spin off industries onshore, Guyana has much to look forward to.

Over the last 18 months, the country has received revenues from seven oil lifts of about one million barrels each. According to the government, in the next 10 years, the country will be producing up to one million barrels of oil per day. Oil and gas sector growth has also been bolstered by several new commercial finds in the Stabroek Block. Most recently, the operating company ExxonMobil Guyana announced its twentieth commercial find at the Longtail-3 well in June. With this discovery, Guyana’s reserves reached nine billion barrels of oil equivalent. The Stabroek Block co-venturers have stated that they will continue to push forward in exploration and development in the second half of 2021, and additional exploration is expected in other blocks as well.

Guyana’s first FPSO, the Liza Destiny, which is capable of producing 120,000 barrels of oil per day, will soon be complemented by the Liza Unity, which has already been built in Singapore and is expected to depart for Guyanese waters soon. The Unity can produce 220,000 barrels per day, which will nearly double the country’s production capabilities in 2022. The Unity is also designed to avoid all routine flaring, which will help Guyana reach environmental goals and become a leader for cleaner energy development in the future.

Guyana should also continue to benefit from elevated oil prices in the second half of 2021. Despite historic lows in 2020, Guyana was still able to generate significant revenues from oil production and was the only country in Latin America and the Caribbean to experience economic growth. The seventh oil lift, which arrived in the beginning of July, generated approximately US$80 million, the highest amount yet.

Brent crude currently stands at over US$70 per barrel and analysts at the U.S. Energy Information Administration (EIA) expect crude oil prices to remain high and hover around US$72 per barrel in the second half of 2021. Other agencies forecast prices reaching US$75 per barrel. This means that Guyana’s oil lifts should continue to win even more money, increasing the funds in the country’s Natural Resources Fund (NRF).

According to a report by Rystad Energy, which evaluates oil revenues at different price points, Guyana could eventually earn hundreds of billions of dollars from oil production. If oil prices were to average US$60 per barrel, oil revenues would be US$200 billion over time from the 9 billion barrels in reserve. This money, which will be funneled into the NRF, should give the government significant room to invest in new infrastructure projects, pay off debts, and invest in future generations.

Unofficial reports have stated that the fund sits at over US$430 million, including revenues from the most recent lift. Contrary to recent claims about “debts” related to this money, the funds in the NRF represent final profits that belong solely to Guyana. Any money in the NRF has already had all costs accounted for and cannot be touched by operating companies. Guyana’s profit-sharing model, whereby it receives a royalty and 50 per cent of profits after accounting for development costs, lets development continue without the government investing anything. All projects are financed fully by the operating companies, which can only recover those costs from production revenues. That leaves the government with no debts from oil and gas exploration, development or production operations, and a 50 per cent share of all the profits generated.

Direct oil revenues will provide most of the opportunities, but continued oil development and a burgeoning energy sector could create other positive benefits. According to the International Monetary Fund, the country is expected to experience 16.4 per cent GDP growth year-over-year in 2021, driven by continued growth in the energy sector. New exploration by ExxonMobil, Tullow, and Repsol, among other smaller operators, have the potential to lead to new finds and new opportunities.

Significant investment in the oil and gas sector, like the US$9 billion Payara project, should also drive job growth, opportunities for local suppliers and increased day to day economic activity in Guyana. The recently announced gas to shore project, which will use excess gas produced on FPSOs to produce cheaper and reliable electricity on shore, has the potential to support the development of spin off industries.

With continued economic growth, steadily increasing revenues, and attractive conditions for new investment, Guyana’s future looks bright.