IN late October, two more oil discoveries offshore Guyana were made at the Sailfin-1 and Yarrow-1 wells in the Stabroek Block, following the two discoveries at Fangtooth-1 and Lau Lau-1 that were announced in January, the three discoveries made in April at the Patwa, Barreleye, and Lukanani wells, and the two discoveries made at Seabob-1 and Kiru-Kiru-1 in July of 2022, bringing the total discoveries in Guyana in 2022 to nine.
Since 2015, the Stabroek Consortium, led by operator, ExxonMobil, has made over 30 discoveries on the block, as offshore development and production increased, and Guyana’s oil-and-gas sector rapidly expands.
In preparation for up to 10 floating production, storage, and offloading vessels (FPSOs) operating in Guyana by the end of the decade, ExxonMobil and its partners increased investment in local facilities, signing deals with projects like the just-announced Vreed-en-Hoop Shore Base Inc. (VEHSI) project, a 100 per cent Guyanese- owned operation that will significantly boost logistics capacity in all sectors.
These moves represent confidence that Guyana’s position as a stable and democratic oil producer will be a necessary partner in the decades to come, as consumers are able to benefit from increased production.
President of ExxonMobil Upstream Company, Liam Mallon has hailed the progress made to date, as Guyana continues to see success with its exploration, and an accelerated pace of development.
“We are committed to responsibly and safely developing this world-class resource to help meet global demand for secure, reliable and lower-emission energy. Our investments, through the pandemic, have allowed us to increase supply at this critical time, while creating value for the people of Guyana, our partners and shareholders,” Mallon said.
Investments in Guyana continue to surpass record levels, as companies see the country’s burgeoning oil sector as an attractive prospect. But with a likely global recession on the horizon, doing so requires a careful balance of the fiscal terms and non-fiscal factors that make a country an attractive destination for investment.
The government recognises that developing its oil-and-gas sector is the best opportunity to bring in capital necessary to grow the economy and improve the standard of living for Guyanese. Being able to maximise value to the country is crucial to the long-term well-being of Guyana as an emerging regional leader.
Moreover, with companies on the hunt for more oil resources in the country, and targeting more wells, now, more than ever, is a critical time for Guyana to strike the right balance between increasing investments, staying competitive, and creating transparent processes that will benefit all parties involved.
Under the terms of the production sharing contract, companies are incentivised to make operations as cost-effective and safe as possible. Last week, it was announced that Mitsui Ocean Development & Engineering Company Inc. (MODEC) has been contracted to build the fifth FPSO to operate offshore.
This will bring additional diversity to the supply and service companies already setting up new headquarters in Georgetown.
Many of the most promising jobs and contract opportunities that will be available to local workers and companies come, not from major oil companies but from contractors like MODEC that do much of the day-to-day work of production. Having more of them operating in Guyana bodes well for local content.
Guyana is working to develop its resources rapidly, to make sure it takes advantage of high demand for oil that may not last long- term. Maximising revenues right now can help ensure sustained economic and social investments in the country for the foreseeable future.
The country has already been the recipient of some of the largest investments anywhere in the world in offshore development. The accelerated pace of development in the country reflects the skill and efficiency of thousands of experts working to take advantage of a limited time opportunity to capitalise on the earning potential of the Guyanese oil-and-gas sector. These two new discoveries and another FPSO in the works reflect another step forward for local businesses, workers and the economy.