"...emerging markets will grow faster than the
developed world for decades to come."

Gideon Rachman, The Financial Times

Guyana becomes key supplier of oil to Europe

Guyana becomes key supplier of oil to Europe

As Guyana ramps up oil production, it has become a key player in alleviating energy shortage in Europe. Almost half of the country’s oil exports have headed to Europe so far this year, with expectations of increasing supply to the region as winter approaches.


Incidentally, since the start of the Russia-Ukraine war, the European region has been experiencing a severe energy crisis, largely resulting from a ban on purchasing Russian oil because of sanctions over the war; and because Russia has restricted natural gas supply to the region in retaliation of the sanctions.


According to vessel monitoring data by Refinitiv Eikon, an information and analytics firm, 49% of Guyana’s total oil exports have headed to Europe so far this year, up from 16% in 2021. Cargoes to Europe have averaged 110,000 barrels per day (bpd) from January through early September, more than the entire daily volume shipped to all destinations in 2021. Comparatively, in 2021, Guyana exported 101,000 bpd of crude, most of which went to Asia.


In July, oil production offshore Guyana exceeded 386,540 bpd, marking the highest production recorded in a day since first oil.





In the Stabroek Block, ExxonMobil affiliate Esso Exploration and Production Guyana Limited (EEPGL) is the operator and holds 45% interest. Hess Guyana Exploration Ltd. holds 30% interest and CNOOC Petroleum Guyana Limited holds 25% interest.


All of the oil produced by the Exxon Mobil, Hess Corp, and the CNOOC consortium, is entirely exported. Guyana sells its share through open-market tenders and via a trading unit of Saudi Aramco.


None of the parties have struck long-term supply deals with specific customers for the oil. Government bans on Russian oil since the invasion of Ukraine have spurred demand for alternative crudes, and Guyanese oil fits refiners from Britain to Italy better than rival Latin American grades do, according to Refinitiv.


Guyana’s oil output has almost tripled so far this year, reaching some 350,000 bbd. Increased shipments to Europe come on the back of the launch of the country’s second floating production storage and offloading (FPSO) facility, the Liza Unity, which began production in February of this year. The Liza Unity has a production capacity of approximately 220,000 gross barrels of oil per day. The first FPSO, the Liza Destiny has a production capacity of approximately 140,000 gross barrels of oil per day. Both projects are operated by ExxonMobil.


It is expected that a third FPSO, the Prosperity, with a production capacity of approximately 220,000 gross barrels of oil per day will come online in late 2023.


As the country ramps up production, at least six FPSOs with combined production capacity of more than 1 million gross barrels of oil per day are expected to be in the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources.


According to the government, Guyana’s the oil sector grew 73.5% in first half of 2022, with 34.6 million barrels produced, compared to 20.2 million barrels in the first half of last year. Fueled by the growth in the sector, Guyana’s gross domestic product (GDP) grew by 36.4% in the first half of the year.


In terms of the sector’s contribution to GDP growth, the government has increased its GDP growth guidance for this year to 113% from 96.7%. That is according to the finance ministry’s half-year report which estimates that the sector expanded by 73.5% in the first half when 34.6Mb (million barrels) of oil were produced versus 20.2Mb in 1H21.


“Given the outturn in the first half of the year, total production is expected to reach 93.6 million barrels by year-end,” states a Ministry of Finance report. The ministry forecasts total GDP growth of 56% in 2022, with the non-oil economy growing by 9.6%.


According to Rystad Energy, an independent energy research and business intelligence company Guyana’s oil and gas revenues are on track to break the US$1 billion mark this year and accelerate to US$7.5 billion annually in 2030.


Rystad noted that 2022 is set to be a turning point for the Guyana government to start capitalizing on the vast reserves in the offshore field, with revenues more than doubling over 2021 levels.

The Norway-based group said production growth is set to accelerate, with revenue gaining momentum as new pre-Final Investment Decision (FID) projects are sanctioned and brought online, leading to peak government revenues of US$16 billion in 2036. These projections do not factor in undiscovered resources.


The government received US$307 million in revenue from its share of profit oil, along with royalties to the tune of US$37.1 million, in the first half of the year. The cumulative balance on the Natural Resource Fund (NRF), inclusive of interest income, was US$753.3 million, after government withdrew US$200 million in May to support the budget.

Dwarka Lakhan

Dwarka Lakhan

Dwarka Lakhan is a pioneer in emerging markets journalism in Canada. His first emerging markets article, “Africa Joins Ranks of the Emerging,” appeared in Investment Executive, Canada’s leading newspaper for financial advisors, in September 1994. Since then he has written hundreds of articles on the full spectrum of emerging markets and has conducted more than two thousand interviews with emerging and frontier markets investment professionals.

Related Articles

Total public debt rising, not falling

Contrary to misleading headlines in the local press, Guyana’s external as well as its domestic public debt have been rising

Diversifying Guyana’s non-oil economy tough without a development plan

As Guyana strives to diversify its rapidly growing oil-based economy, the government has embarked on an ad hoc spending spree,

Stocks on Guyana Stock Exchange Rise Dramatically

As interest in Guyana grows, selected securities on the Guyana Stock Exchange (GSE) have risen dramatically so far this year.