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US$49B oil windfall will reshape Guyana’s development trajectory – IDB report

, Source - https://www.inewsguyana.com/us...ajectory-idb-report/

https://i0.wp.com/www.inewsguyana.com/wp-content/uploads/2020/04/oil-1.jpg?resize=641%2C420&ssl=1Flashback- The fuel hose leads from the Liza Destiny to the Cap Philippe for the transfer of Guyana’s first million barrels of crude

With an estimated 8 billion barrels of oil and a projected fiscal windfall of US$49 billion in revenues over the next few decades, Guyana is poised to become a major player in regional and international energy markets.

This is according to a recent report by the Inter-American Development Bank titled “Traversing a Slippery Slope: Guyana’s Oil Opportunity”.

The report which was authored by analysts; Lenin H. Balza, Emily Brearley, Dillon Clarke, and Victor Gauto states that the Stabroek discoveries are expected to place Guyana among the largest oil-producing countries in the region.

“It is undeniable that the fortunes of Guyana’s hydrocarbon discoveries will usher in a paradigm shift that will reshape the country’s development trajectory,” the authors say.

Using a model of five developments which are expected to be in full operation in the Stabroek block by 2025, the IDB report states that Guyana is projected to rake in around US$49 billion by 2054.

It explains that with the progression of Liza Phase 1 into the production phase, the planned development of the other projects requires some extrapolation of the economic parameters given the projected commissioning of 5 projects to achieve a publicized production level of 750,000 barrels of oil equivalent by 2025.

The Liza Phase 2 is planned to commence production in 2022 at a capacity of 220,000 bpd using the Liza Unity floating production storage and offloading (FPSO) facility; Payara also at a capacity of 220,000 bpd is scheduled for 2023, using the Liza Prosperity FPSO. To meet forecasted production levels in 2025, the model assumes two additional projects, projects 4 and 5, which should share similar production profiles to Liza Phase 1 at 120,000 bpd.

Further, the model assumes that each project will have a production life of 20 years with a two-year decommissioning period.

According to the authors, however, the model does not include gas, given the expected use to improve crude recovery in current fields and new projects, and also, the potential for the development of gas-to-shore facilities and associated industries.

They also explain that the model excludes the likely commissioning of other projects beyond the 2025 horizon for the Stabroek license area, as well as, the development activities that may manifest into production from the other license areas.

To date, the Stabroek field is estimated to hold more than 8 billion barrels of oil equivalent after 16 discoveries.

According to the authors, Guyana as a new oil-producing country – despite debates about the ”best deal” – is poised to drastically transform over the near and medium term.

https://i0.wp.com/www.inewsguyana.com/wp-content/uploads/2020/08/Hon.-Minister-Vickram-Bharrat-1-e1596727888245.jpg?resize=684%2C420&ssl=1Minster of Natural Resources, Vickram Bharrat

However, they were quick to point out that “the direction and magnitude of transformations will depend on a combination of cohesive policies and strong institutions to ensure the realization of optimal value capture from resource exploitation and mechanisms for benefit transfer to all segments of Guyanese society, for this generation and the next”.

“Thus, the phrase ”if managed well” must be affixed to discussions of how Guyana’s exploitation of hydrocarbons can be a vehicle for inclusive growth and inter-generational wealth creation”.

The authors contend that as a new oil-producing country in a turbulent global energy market, “navigating the challenges and risks associated with overreliance on the petroleum sector should be designed as part of long-term development strategies”.

Meanwhile, they argue that while the likelihood of adjustments to initial contract terms are probable, any improvement in Guyana’s government take for all its active petroleum agreements will translate to greater windfalls to the country and further accelerate the transformative impact of responsibly managed hydrocarbon extraction.

“Thus, the impetus is on policy makers to undertake the necessary internal analyses to determine whether the current PSAs are adequately reflective of the country’s position as one of the newest and largest oil plays in Latin America and the Caribbean.”

Minister Vickram Bharrat was given responsibility for the natural resources sector when the PPP/C Government was sworn in to office in August. He had said that the revenues from oil are expected to assist government in fast-tracking its development objectives which would see Guyanese enjoying a better quality of life.

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According to the article, the Guyana government will receive $US49B from oil by the year 2054.  On average therefore revenue from oil will be about $US1.4B per year for the next 34 years.  This is better than nothing but is it really a massive windfall?

Guyana to become a major oil producer

Ron Bitto, Contributing Editor, Source - https://www.worldoil.com/magaz...a-major-oil-producer

A flurry of deepwater discoveries in the Atlantic off Guyana’s coast has changed the future for the small South American nation, which has yet to produce a barrel of oil. Since the Liza-1 discovery in May 2015, ExxonMobil and its partners have identified reservoirs containing at least 5.5 Bboe of recoverable reserves. The operator has fast-tracked the Stabroek Block development with the first of at least three FPSOs expected on location in September 2019 and first oil anticipated in early 2020. The rapid approach of oil revenue and the likely transformation of the nation’s economy have given the government and civil society a tight schedule to prepare for the opportunities and problems that will result from becoming a major oil producer.

Guyana-Suriname basin resource assessment. From 1975 to 2014, about 40 exploratory wells were drilled in Guyana and Suriname–both on and offshore–without finding commercial results. The oil and gas industry’s interest in the Guyana-Suriname offshore basin was piqued by a 2000 USGS assessment of South American undiscovered resource potential. Updated in 2012, the report identified the basin as the second-largest prospect on or near the continent, behind Brazil’s pre-salt Santos basin. The assessment’s mean values for the basin were 13.6 Bbo, 21.2 Tcf of natural gas, and 574 MMbbl of natural gas liquids. In 2012, CGX and Repsol drilled exploratory wells that encountered high pressures, but both were plugged without commercial finds.

Flurry of discoveries. In 1999, before the USGS assessment, Exxon Mobil and Shell signed an agreement with the Guyanese government for offshore exploration. Shell pulled out of the arrangement in 2012, and Exxon Mobil (45%) brought in Hess (30%) and CNOOC’s Nexen (25%) as partners in the 6.6-million-acre Stabroek Block, 90 mi off the Guyana coast. In May 2015, the Liza-1 exploration well, drilling in 5,719 ft of water, encountered 295 ft of high-quality oil-bearing sandstone upon reaching 17,825 ft, TVD. Exxon Mobil estimated that the reservoir contained recoverable reserves between 800 MMboe and 1.4 Bboe. Based on these results, Exxon Mobil contracted Petroleum Geo-Services (PGS) to conduct the largest 3D seismic survey in the operator’s history, to provide a more detailed assessment of the Stabroek Block’s geology. By March 2017, Exxon Mobil had confirmed the Liza discovery with three appraisal wells, and had made new discoveries with the Payara-1 and Snoek-1 wells, confirming the promise of the USGS assessment,Fig. 1.

https://www.worldoil.com/media/12259/wo0919-bitto-regional-report-guyana-fig-01.jpg?width=300

Fig. 1. Exxon Mobil’s discoveries in Guyana’s Stabroek Block.

Source & rest of article - World Oil - https://www.worldoil.com/magaz...a-major-oil-producer

I do not believe the PPP can use wisely that kind of revenues. One would expect a development similar to Malaysia, Singapore, the Middle-East countries. Sadly, from what exists of the PPP, I can only see a Nigeria. Not even close to a Venezuela in its chaos. The PNC would be no better either, present crop of Indians and Blacks politicians are too petty.

@Totaram posted:

According to the article, the Guyana government will receive $US49B from oil by the year 2054.  On average therefore revenue from oil will be about $US1.4B per year for the next 34 years.  This is better than nothing but is it really a massive windfall?

They don't need more than that.  The budget only costs US$1.65 billion. The rest will be obtained through the Revenue Department.

You could be right.

@Totaram posted:

According to the article, the Guyana government will receive $US49B from oil by the year 2054.  On average therefore revenue from oil will be about $US1.4B per year for the next 34 years.  This is better than nothing but is it really a massive windfall?

Per capital it is just under $2000.  That's my dry cleaning bill.  Is that enough to make Guyana wealthy?

@Ramakant-P posted:

They don't need more than that.  The budget only costs US$1.65 billion. The rest will be obtained through the Revenue Department.

You could be right.

Just imagine if there was no oil revenue, The PNC would have taken Guyana to the Grave. Once again the PPP to the rescue.

@seignet posted:

I do not believe the PPP can use wisely that kind of revenues. One would expect a development similar to Malaysia, Singapore, the Middle-East countries. Sadly, from what exists of the PPP, I can only see a Nigeria. Not even close to a Venezuela in its chaos. The PNC would be no better either, present crop of Indians and Blacks politicians are too petty.

The PNC would have taken Guyana to Nigeria, only Blacks can be so creative.

Thank the LORD Guyana is in good hands, the PPP. JUST WATCH AND SEE!

@Ramakant-P posted:

Granger negotiated a bad deal.  The PPP got it right.  Don't you think?

The PPP negotiated a bad deal.  The Coalition partially corrected it. The PPP promised to renegotiate it but didn't.

@Totaram posted:

Per capital it is just under $2000.  That's my dry cleaning bill.  Is that enough to make Guyana wealthy?

Do your maths again, it's not $14M, it's 1.4B, using a population of 700,000.

@Nehru posted:

Seigy, not because you are incapable of forward, progressive thinking the PPP is the same. What the PPP is doing in 2 months the PNC did not do in 33 years.

guy, i know you are intelligent. stop being an indian and ppp supporter and examine the ppp since 1953.

@seignet posted:

guy, i know you are intelligent. stop being an indian and ppp supporter and examine the ppp since 1953.

How can he stop being an Indian?

There are two kinds of people in Guyana, Indians and those who would like to be Indians.

@seignet posted:

guy, i know you are intelligent. stop being an indian and ppp supporter and examine the ppp since 1953.

The PPP built Guyana.  The PNC destroyed it. You are so blind you can't see past your nose.  Since 1953 the PNC ruled Guyana for 37 years. What were their achievements? All they did was formed the National service to terrorize the Indo_guyanese, rigged elections, raped Indian women, and steal their wealth.  Don't talk about the PPP, you don't know anything about them.  The PPP was formed by blacks.

bro, the PNC was formed by influential indians in agrement with forbes . The PPP had black shovel man supoorters. While the PNC had indian doctors and lawyers. CBJ disliked smart ppl. Ask BS Rai, Fenton Ramshoyne and others.

@seignet posted:

bro, the PNC was formed by influential indians in agrement with forbes . The PPP had black shovel man supoorters. While the PNC had indian doctors and lawyers. CBJ disliked smart ppl. Ask BS Rai, Fenton Ramshoyne and others.

I did!   Chedi had the right to kick them out. Balram Singh Rai told me that the only thing left for him to do, " is to clear the forest and put bbl ppl there surrounded by a barbed-wire fence. Do you think you BS Rai?

Why you people can't accept that the PPP is the government and has done more for Guyana than the PNC?

Why can't you accept the fact that the PNC never did anything for Indians in Guyana?

Why can't you accept the Status Quo?

@Totaram posted:

According to the article, the Guyana government will receive $US49B from oil by the year 2054.  On average therefore revenue from oil will be about $US1.4B per year for the next 34 years.  This is better than nothing but is it really a massive windfall?

It is better than what the PNC had asked for.  You are right it is a massive windfall. The PPP is a force to be reckoned with.