This year is set to be another historic one for Guyana as the country races ahead to join the ranks of the world’s major oil producers.
After a milestone year that included several new discoveries, new production that doubled Guyana’s revenues and a historic budget that included billions of Guyanese dollars in oil revenues for the first time, 2023 is set to push Guyana’s new status even further.

ExxonMobil, still the largest operator offshore Guyana, is planning to complete its current 25-well drilling programme by the end of June. That will be followed by an even larger investment in exploration—a 35-well campaign that will be launched when the current plan is completed.

ExxonMobil Guyana has also applied for an environmental permit to drill up to 12 exploration wells on the Canje Block during 2023-2024. The Canje Block lies further offshore than the Stabroek, in deeper water with more challenging drilling conditions.

No commercial-scale discoveries have been made so far on the Canje Block despite years of exploration and billions of US dollars invested, a reminder that outside of the incredibly prolific Stabroek Block, Guyana remains a somewhat risky prospect.

But the evidence from similar countries like Suriname also points to an answer to questions related to Guyana’s production sharing contracts and how they balance that risk. Suriname boasts a similar slate of discoveries and prospects, but still has zero commercial production offshore, no revenues and no final decisions to invest in development even now, years after the first finds were made.

The largest investors have mainly steered clear of Suriname in favour of Guyana these last five years, in large part because the country’s contracts do not offer sufficient incentives for companies to take the risk of investing in oil exploration.

Meanwhile, companies continue to develop additional assets here in the Stabroek Block, most notably the Payara and Yellowtail projects, which have passed environmental reviews and should commence in 2023 and 2025 respectively.

That will add 470,000 barrels per day to Guyana’s production levels—meaning substantially more revenues within the next few years. If all projects remain on track, Guyana would be producing at least 800,000 barrels per day offshore by 2025 and well over a million barrels per day by the end of the decade.

With production already topping 360,000 barrels per day in the third quarter, the government took in more than US$1.4 billion last year in royalties and profit sharing, and that is likely to increase substantially in 2023.

While international organisations urge caution in spending oil revenues as a rule, economic analysts are careful to note that Guyana is not Norway. An already industrialised country with a high standard of living before it discovers oil can afford to stash away its revenues and spend little.

But Guyana has significant needs right now, including things like infrastructure and education, where early investments can help build significant economic growth years down the road.
The government is starting to spend oil money to meet those needs. The budget passed in February was already a landmark in terms of the country’s oil future, including record high spending on education and health funded by oil revenues, and combined with historically low deficits.

The 2022 budget was 44 per cent larger than 2021, and education and healthcare experienced 22 per cent and 36 per cent funding increases, respectively.
Expectations are that this trend will accelerate rapidly in 2023 with more money flowing to a wide variety of projects and social programmes.

The government also expects significant progress in 2023 on the electricity front, with construction beginning on the gas-to-power plant at the Wales Estate and the approval process moving forward for the Amaila Falls hydropower project.

The gas project could start lowering household electricity costs by as much as half when it comes online in 2024 or 2025.
With more than 30 finds to date offshore and more hopefully on the horizon, the news continues to be good for Guyana’s rapid efforts to scale up production while oil is still commanding high prices.