Guyana: The New Star on the Global Oil Map

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Irina Slav
Irina Slav
Irina writes about oil, gas, and all things energy. Her stories have appeared in, Seeking Alpha, Business Insider, and Fortune.


Exxon Guyana Oil Discoveries

When Exxon first started drilling off the coast of Guyana, it hardly anticipated the oil price crash of 2014. The supermajor first struck oil in the Stabroek block in 2015, in the worst of the crisis. Since then, Exxon and its partner Hess have made 13 oil discoveries, tapping reserves that may reach as much as 5.5 billion barrels of crude. That could be less than half of what the rocks under the waters around the tiny South American country contain.

In 2000, the U.S. Geological Survey estimated the Guyana-Suriname Basin could hold some 13.6 billion barrels of oil and 32 trillion cu ft of natural gas in recoverable reserves. That was 19 years ago, and since then exploration and production technology has improved significantly, making more barrels technically recoverable. No wonder Exxon has been striking oil repeatedly.

Liza well scheduled for production in Q1 2020

Exxon and Hess—and their partner Chinese CNOOC—plan to begin commercial production from the Liza well in the first quarter of 2020. Initially, this should be 120,000 BPD, rising to 220,000 BPD during the second phase of development. Meanwhile, Exxon is working on its other discoveries in the Stabroek block. The combined output from these discoveries could reach 750,000 BPD over the next five years.

That is an impressive speed of development. There has been a lot of talk, from industry insiders and observers alike, about offshore projects taking too long to bring from discovery to commercial production to be worth the investment. (In the post-crisis world of lower-for-longer prices). Exxon’s success in Guyana has disproved the universality of this observation. Guyana is turning into the next focal point of the oil industry in a world of shrinking discovery potential.

Tullow Oil gets in on the action

Exxon and Hess are not the only ones drilling for oil offshore Guyana. Tullow Oil announced in August its first discovery in the Orinduik block, two months after drilling started. The well, Jethro-1, could hold more than 100 million barrels of crude, the company said. Another two wells got scheduled for the Orinduik block, with the combined reserves of all three estimated at 400 million barrels. The whole block, however, could hold almost 4 billion barrels of recoverable crude. That’s the latest reserve estimate, and it is much higher than earlier ones.

Then, in mid-September, Tullow announced a second discovery in the Orinduik block and quite a significant one, at that.

“Joe is the first oil discovery to be made in the Upper Tertiary,” the UK-based company said, “and de-risks the petroleum system in the west of the Orinduik block, where a significant number of Tertiary and Cretaceous age prospects have been identified.”

In other words, the find in Joe-1 may open up a lot more recoverable reserves than initially thought.

Investment by Total

It appears Guyana’s oil wealth got underestimated from the start. When Hess Corp. bought its 30% interest in the Stabroek block, its reserves were estimated at just 500 million barrels of crude. Now, Shell must be kicking itself for selling the stake in what has turned out to be one of the most significant discoveries in the oil industry in decades. Other oil majors, in the meantime, approached Eco Atlantic, the minority partner of Tullow in the Orinduik block with offers for a stake acquisition.

At the time, in early 2017, Eco Atlantic’s chief executive declined to name names but said they were “big”. One of those big names was French supermajor Total: it snapped up 25% of Eco Atlantic’s 40% stake in Orinduik in September 2017. The deal got completed last year.

Total’s entrance into Guyana’s offshore oil industry is significant. The French company has been particularly picky with its investments post-2014 and has created a lasting impression of being a lot more cautious and low-risk than most of its peers. In other words, if Total has bet on Guyana, it is a safe bet.

It was not always this way. When Exxon signed its first production sharing agreement with the Guyana government, it was 1999 and exploration efforts until that year had failed to produce any discoveries. It took another 16 years for the first discovery to get made. Since 2015, however, it seems wherever drillers set their drillships, they strike oil. The problem for companies that might want in on the Guyana action is… The pie has been already cut and served.

Other players

Besides Exxon, Hess, CNOOC, Tullow, Total, and Eco Atlantic, explorers in the waters off of Guyana include Chevron (after its acquisition of Anadarko, which holds a license for the Roraima block) and Repsol, as well as one energy junior, CGX Energy. Most of the acreage available for exploration offshore Guyana is in supermajor hands.

Besides the Stabroek block, Exxon shares control of the adjacent Canje block with Total, each with a 35% stake. The U.S. giant also holds the operatorship and 35% in another block adjacent to Stabroek: Kaieteur, where the first well is scheduled for next year. Hess is a minority partner there as well, with 15%. Total, for its part, holds a minority stake of 25% in a third block, Kanuku, where the operator is Spain’s Repsol, with 37.5%. Drilling in the Kanuku block will begin in late September.

CGX Energy, the junior, holds the rights to two blocks, Demerara and Corentyne, which it earlier this year agreed to share—along with the exploration expenses—with Frontera Energy.

Guyana has always held the promise of oil riches. The tiny nation is squeezed between Venezuela with its biggest-in-the-world oil reserves, and Suriname. Suriname is a minor oil producer but shares with Guyana the basin that holds all those billions of barrels. If anything, not finding any oil should have been surprising.

Can Guyana survive the oil curse?

The country has yet to start reaping the benefits of its oil wealth. Some worry it will become the latest to suffer the so-called oil curse. (Which has most recently and spectacularly manifested itself in Guyana’s northern neighbour, Venezuela).

Indeed, as a BBC analyst noted in a story earlier this year, Guyana has all the symptoms of a country vulnerable to the oil curse. Poverty and unemployment are widespread, and so is corruption. In other oil-rich nations, Simon Maybin observed, the petrodollars have only made matters worse rather than better. That, in turn, has had a bearing on the investment climate, and therefore the future development of oil wealth.

Right now, the political situation in Guyana seems relatively stable. Earlier this year tempers flared up with the ruling coalition refusing to accept the result of a no-confidence vote and challenging it at court. It lost the case, and elections could get held before this year’s end.

Whoever wins, chances are Exxon and company are safe, at least for the time being, until the oil starts flowing and the petrodollars start coming. As history in other resource-rich countries such as Indonesia and Iraq has shown, the time may come for contract term renegotiations that oil supermajors might not like. That is only a possibility and a relatively distant one. For the time being, Guyana loves Big Oil, and Big Oil loves Guyana.



  1. Hi thanks for your article. Do you know if the companies involved will be selling shares . As a Guyanese I would like to invest in that way since I cannot capitalise on a business venture.

    • Hi Mina, thanks for stopping by and posting a comment. The larger companies shares would be available on the stock market, you’d just need to apply for a brokerage account that deals in the correct countries where the listings are. You can get online trading accounts in the USA and other places even as a foreign national. Plus, you can discuss with your local advisors. We couldn’t comment on which companies might be selling new shares as it’s not part of our expertise. You can go to their websites and look for press releases and investor information.

  2. Saludos…le escribo desde Venezuela y queria preguntarle si podria orientarme en relcion a la ubicacion de la zona donde se desarrola esas operaciones,para ofrecer los servicios de fabricacion y proteccion de tanques de almacenacionamiento de crudo,estaciones de bombeo,isometria,oleoductos embarcaciones entre otros..Agradeciendo cualquier informacion al respecto ..Atte Manuel.Vegas..


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