RECENTLY, news of overtures from the Organization of the Petroleum Exporting Countries (OPEC) to Guyana to join the powerful oil cartel were widely reported in the business and international press. As one reporter in the Wall Street Journal put it, “the oil cartel is courting Guyana to become its newest member, in a bid to extend the bloc’s influence into a small South American country that has suddenly become the world’s fastest-growing oil producer, according to people familiar with the matter.”

Although OPEC issued a statement denying an official invitation was extended to Guyana, it is yet another sign that the world is taking notice of the burgeoning offshore developments.
The ExxonMobil-led Stabroek Consortium, which includes Hess Corp and China’s CNOOC, is today the sole producer of oil in Guyana. But that is unlikely to be the case for long.

Last week, Canadian firms CGX and Frontera announced a new discovery at the Wei-1 well site, adding to an earlier discovery at the Kawa-1 well in the northern region of the Corentyne block, which the firms operate under a Joint Operating Agreement (JOA). The two companies believe there is “significant potential” in the block.

Bringing a major commercial find to production outside the Stabroek Block would be a significant milestone for Guyana’s offshore oil industry. Outside the Stabroek, no commercial discoveries have been developed and large areas are still considered riskier “frontier” zones. The Government is trying hard to attract investments to these areas as it looks to auction off the rights to explore and develop 14 blocks later this summer.

Over the next few months, the firms will analyse data from the drilling activities to assess the resource potential of the new find and the Corentyne Block. The block is near TotalEnergies’ Block 58 across the maritime border with Suriname and could benefit from the upcoming changes to the Petroleum (Exploration and Production) Act, which would allow cross-border unitization. This is an internationally recognised best practice for jointly developing an oil and gas field underlying more than one block.

In response to the latest find, the Ministry of Natural Resources stated, “we eagerly await the results of this analysis,” adding that “this recent discovery marks a significant milestone in offshore Guyana’s exploration endeavours, with a total of 45 findings since 2015, reaffirming the country’s hydrocarbon potential outside of the highly productive Stabroek Block.”

Spending on Guyana’s offshore oil developments continues to steadily increase, with CGX and Frontera spending a reported US $190-195 million to drill the Wei-1 well.
ExxonMobil and its partners continue to invest heavily in the prolific Stabroek block as well. The company recently noted in its 2022 financial statements that it is “committed to invest an additional GY$4 trillion through 2027 to develop the Payara, Yellowtail, Gas-to-Energy and Uaru projects. Together, these projects will take production capacity over 1M bbls/day” an ExxonMobil representative said.

In 2022 alone, ExxonMobil Guyana invested about GY$570 billion, increasing its total investment in Guyana since 1999 to GY$2 trillion. Analysts have noted that the company has put significantly more into Guyana than it has recovered so far, and it continues to reinvest nearly all profits into further development. In 2022 a record GY$240 billion was paid into the Guyana Natural Resource Fund from production in the Stabroek Block. This funding is supporting the rapid expansion of the national budget and stimulating further investment in the country.

Thanks to that investment, the Stabroek Block is producing some 380,000 barrels per day (bpd) of crude in Guyana from the ExxonMobil operated Liza Phase 1 and Liza Phase 2 projects, with the Payara project expected to start production later this year and add an additional 220,000 barrels of oil per day to the output.

In their 2022 benchmarking report, Rystad Energy found that Guyana leads the world in offshore discoveries since 2015, with 11.2 billion barrel of oil equivalents discovered to-date. Guyana has accounted for 32% of all offshore oil discoveries since 2015 and forecasts estimate that production could reach as high as 1.7 million barrels per day in 2035, based on the current discoveries and the pace of development.

The competition for investment is heating up around the world. Global oil companies are pumping billions of dollars into offshore drilling, reversing a long decline in spending and Guyana has been a major beneficiary. With the upcoming changes to the Petroleum (Exploration and Production) Act, Guyana’s first offshore oil blocks auction and the relinquishment of unexplored acreage due later this year, Guyana is well poised to continue to attract record investments.