Understanding Energy: New study estimates huge revenue growth for Guyana
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A NEW report from energy analysts at Norway’s Rystad Energy identifies 2022 as a landmark year for Guyana in more ways than one. It finds that government revenues from oil production could reach as high as US$1-1.5 billion and average US$3.6 billion per annum through 2030.

Rystad forecasts the government take to peak at US$16 billion per year in 2036 and average US$12.4 billion annually between 2031 and 2040. Cumulatively, this amounts to roughly US$157 billion in government revenue for Guyana by 2040.

The report also examines the rapidly evolving trajectory of Guyana’s development in depth—from its role in global oil supplies, to how its contract stacks up against other countries’ and how its oil might perform in a world increasingly concerned about climate change.

According to Rystad, Guyana leads in offshore discoveries globally since 2015 with 11.2 billion barrels of oil equivalent discovered, accounting for 18 per cent of discovered resources and 32 per cent of discovered oil. Guyana, singlehandedly, accounts for 18 of the top 30 largest offshore oil discoveries globally since 2015.

This news comes on the heels of Guyana looking to attract more new investment in its next oil field tender this quarter, which is President, Dr. Irfaan Ali’s goal of reaching more diversity in its oil and gas sector.
To date, the ExxonMobil-operated Stabroek Block has been key to Guyana’s rise from a country with no known oil to a sought-after global investment destination and oil producer over the past several years. ExxonMobil’s announcement of two new finds this week at Seabob and Kiru-Kiru brings the total number of significant discoveries to more than 30.

Furthermore, with all the discussions surrounding Guyana’s contract and fiscal terms, Guyana already has more than US$849.63 million from 12 oil lifts and US$102.06 million from royalties in the Natural Resources Fund (NRF).

Crucially, Rystad also evaluated the government take (including royalties and profit sharing) from the Stabroek contact against 11 other countries including established producers and newer “frontier” areas like Guyana.
The report found that the government share of total value will reach roughly 59 per cent including royalties and profit sharing. That compares well to 47 per cent in Suriname and 58 per cent in Nigeria.

Guyana also ranked higher than the peer group average government take of 54 per cent. Considering longstanding confusion over the terms of the contract, this new analysis is vitally important. The report also outlines how a tax-and-royalty system like that of the U.S. may look better on paper but would deliver only 40 per cent of total value to the government, compared to the profit-sharing-and-royalty structure of Guyana’s contract.

While the report finds that Guyana currently accounts for less than one per cent of world oil production, it forecasts massive growth from the discoveries made so far. Guyana is on track to becoming the fourth largest offshore oil producer in the world by 2035—outpacing the U.S., Norway and Mexico.

Guyana also appears to be largely on track to meet its sustainability commitments. The report found the emissions intensity of Guyana’s production is nine kilogrammes of CO2 per barrel of oil equivalent, half of the global average for oil production.

While it’s difficult to understand oil as “low emission,” energy analysts look closely at the relative levels of emissions intensity for various oil sources. Many companies have abandoned higher-emissions oil in places like Alberta, Canada in recent years as part of the global fight against climate change and a growing list of nations that impose some form of carbon emission tax.

Guyana is lucky enough that its oil outperforms roughly 75 per cent of global producing assets, making it “one of the most resilient segments under carbon tax scenarios,” according to the report.
This is due to several factors, “including larger scale developments with fewer wells with high rates of productivity, more specialised technical solutions to limit emissions, such as gas reinjection, and more stringent regulations.”

The government has been very involved in fast-tracking legislation that advance the country’s framework for managing its rapidly expanding oil and gas sector, while prioritising Guyanese growth from workforce development to investing its revenues into other non-energy sectors. While the report finds that there is still more to be done to ensure transparent long-term management, it lauded the progress already made on the NRF and local content law.

As Guyana enters the last half of the year with numerous oil and gas successes under its belt, Liam Mallon, President of ExxonMobil Upstream Company, on its latest discoveries said, “the resources we are investing in and discovering offshore Guyana will provide safe, secure energy for global markets for decades to come.”

The latest Rystad report is an important new look into the challenges and potential for Guyana’s energy future as it enters the big league of oil and gas production.

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