The big disappointment for Guyana, following the discovery of between 800 million to 1.4 billion barrels of oil resources by US major ExxonMobil 200 km offshore, is that the production of crude will not begin for another five years (2021).
What’s more, almost all work associated with its recovery will be done offshore, probably using a Floating Production Storage and Offloading (FPSO) vessel, with little actual contact with the Guyana mainland involved, thus providing limited benefit to the overall economy.
Even if enough associated or gas-well gas comes with the oil, the chance of a liquefied natural gas (LNG) industry, as posited by Guyana government ministers, is also minimal. Even if it does happen, that, too, will all be done offshore.
Unlike Trinidad and Tobago, where the oil industry started on land and interaction with the rest of the country including service companies was much easier to accomplish, no such benefit is likely to accrue to Guyana.
All that Guyana is likely to gain from its oil and associated gas discoveries, is revenue from the “profit oil or gas” portion of the production sharing agreement (PSA) the government has with ExxonMobil.
Even that will be minimal at the beginning, since the US energy giant is allowed to recover all its exploration costs by means of “cost oil”, which Jeff Simmons, country manager for ExxonMobil in Guyana, says will run into “several billion US dollars”.
However, the impoverished CARICOM member country in South America, will, at least, have a new source of revenue, vital to the maintenance of the government’s development spending.
This will be channelled into the Sovereign Wealth Fund the government says it wants to establish. It has also said it would consider joining the Extractive Industries Transparency Initiative (EITI), of which Trinidad and Tobago is also a member under the chairmanship of the indomitable Victor Hart.
Although Guyana will have to wait five years for crude oil production to commence, ExxonMobil says it wants to do so at a fairly high level – 100,000 b/d.
At a stroke, Guyana will be producing more oil than the long-established energy centre of the Caribbean, Trinidad and Tobago, which has been in the business for 108 years.
As noted, all of that will be exported, almost certainly to ExxonMobil-affiliated refineries in the US, though it is possible that the company may choose at some point to utilise the facilities of the Petrotrin refinery in Trinidad and Tobago.
Guyana has no refinery of its own and is highly unlikely to get one, considering the cost of building such a facility these days and the fact that the lifespan of the Liza find has been estimated at 20 years, a short time in the life of the normal oilfield.