A JUNE 2024 report prepared by S&P Global and the International Energy Forum (IEF), the world’s largest coalition of energy ministers, has flagged the need for greater investments by oil majors to continue, especially in Guyana and other territories, to meet the growing demand for fossil fuel and its by-products. Specifically, the Upstream Oil and Gas Investment Outlook states that annual upstream investment will need to increase by US$135 billion, to a total of US$738 billion by 2030, to ensure adequate supplies.

The report states that this estimate for 2030 is 15 per cent higher than was assessed by the two entities a year ago and 41 per cent higher than assessed two years ago. They said this is due primarily to rising costs and a stronger demand outlook. Both entities agree nonetheless that “a cumulative US$4.3 trillion will be needed between 2025 and 2030, even as demand growth slows toward a plateau.”

Importantly, the industry leading entities said oil and gas companies are allocating a higher portion of their spending towards decarbonizing operations. This practice essentially increases costs for companies as they tend to methane abatement, flaring reduction, operational and energy efficiency, and Carbon Capture, Utilisation, and Storage (CCUS). Such factors considered, the report highlighted that the majority of new hydrocarbon supplies can be produced at under US$60 per barrel Brent.

Interestingly, the report highlights Guyana as being one of the three territories leading on low cost of production. “The lowest cost supplies are from the Middle East, Guyana, and West Africa,” the report said, adding, “The average weighted Middle East breakeven price is about $30/bbl Brent, whereas Guyana is US$36/bbl and the average new well in the US requires about $57/bbl.”

S&P Global and its partner, IEF, pointed out that the highest end of the cost curve includes heavy crudes in Canada and Venezuela, thereby leaving Guyana as an advantaged territory for attracting exploration spend.

While both entities expressed concerns regarding underinvestment in this decade due to the Russia-Ukraine conflict as well as the Palestine-Israel war, they said these risks have receded for a number of reasons. Chief among them was the accelerated output of suppliers like Guyana which is not part of the Organisation of the Petroleum Exporting Countries (OPEC). The report notes that the rise of Non-OPEC suppliers bodes well for the market.

Further, the June 2024 report said, “Guyana is a prime example of where project development is accelerating. Guyana currently has three projects in operation at its prolific Stabroek Block producing approximately 640,000 barrels a day. Authorities are expected to welcome a fourth project in 2025, increasing monthly output by 225,000 bpd.

An ExxonMobil-led consortium which operates the block already has six sanctioned projects to date offshore Guyana.