(GuyanaChronicle)GUYANA has become a hot name in the oil and gas sector, as all eyes are on the small South American nation because of its economic boom.
In an article written by Cameroonian energy expert, Nj Ayuk, with Guyana being in the spotlight, headlines across the globe have labelled the nation the world’s “hottest frontier oil play,” a site of massive oil and gas finds with great promise for investors.
Before, headlines would have been referring to Namibia, or another country in Africa; however, it is Guyana they are now referring to.
The country that is snuggled among Venezuela, Suriname and Brazil and is situated on the northern coast of South America has blazed the trail with its vast oil discoveries.
More than 30 massive offshore oil discoveries were made in the Stabroek Block, alone, since 2015. Moreover, US oil and gas giant, ExxonMobil, was the first to announce a discovery there and it was estimated that the block holds at least 11 billion barrels of recoverable resources.
As of June, Canadian companies CGX Energy and Frontera Energy announced that their joint venture discovered oil in Guyana’s Corentyne Block, which also was the site of a light oil and gas condensate discovery in May 2022.
Additionally, oil and gas companies have been lured in because of Guyana’s lucrative regulatory and fiscal regimes along with the nation’s vast hydrocarbon resources, and owing to this, various and detailed activities have been going on in the country.
Owing to this, energy industry media outlets like Oil and Gas 360 have described Guyana as “Latin America and the Caribbean’s latest drilling hotspot,” while Bloomberg declares “Guyana Is the Most Exciting Story in the World Oil Market,” and Reuters calls Guyana an “oil powerhouse.”
Although Namibia is not forgotten, Guyana is receiving good press because of its remarkable implementations by its government and thus, Namibia should follow suit.
While the African Energy Chamber is pleased to see Namibia’s government working to provide an enabling environment for upstream activity and updating its tax laws, the country must not stop there and ensure that ongoing exploration and production progress.
The leaders will need to exhaust all measures that would demonstrate Namibia is investor friendly because that is what Guyana has been accomplishing.
During African Energy Week in Cape Town from October 16-20, 2023, Namibia will take centre stage and there will be many discussions about moving from discoveries to production but also the legal, commercial and geopolitical aspects of oil and natural gas development.
GUYANA OFFERS INVESTORS FISCAL GUARANTEES
In order to help the oil and gas companies protect their investments, Guyana includes a fiscal stability clause in its petroleum contracts, which states that if the host country makes legislative or regulatory changes, such as new tax codes, the contracting energy company will be protected from negative economic impacts.
With energy exploration being risk-intensive, failing to provide a fiscal stability clause only adds to investing companies’ exposure and makes them more likely to consider channeling their efforts – and investment dollars – elsewhere. Failing to offer a fiscal stability clause also opens the door to prolonged contract negotiations and costly project delays.
GUYANA FAST-TRACKS DEVELOPMENT
Guyana is also being acknowledged for its ability to keep the momentum in the oil and gas sector by not delaying projects, a quality that Namibia is being urged to adapt.
Less than five years after ExxonMobil’s initial Stabroek Block discovery with partners Hess (U.S.) and China National Offshore Oil Corporate (CNOOC), in 2015, their Liza Phase One project began producing oil. Since then, a second project, Liza Phase Two, went online, and production at their third project, Payara, is expected to get started this year.
ExxonMobil has also made a final investment decision on two additional projects: Production at Yellowtail is scheduled to begin in 2025, followed by the Uaru development coming online in 2026.
Also, the President and Chief Executive Officer (CEO) of the Energy Chamber of Trinidad and Tobago, Dax Driver, recently praised Guyana for developing its oil and gas resources at a record pace.
“For countries like Guyana and Suriname, with these massive oil resources in place, and some of them transitioning into reserves and some being produced, priority has to be to fast-track development of those resources,” Driver said, adding: “This is something which Guyana has done extremely well since its first discovery. It is a world leader in fast-tracking its discoveries.”
With less than one per cent of known global gas reserves, Trinidad and Tobago became the world’s leading exporter of two gas-based products, ammonia and methanol, and went on to become one of the world’s top five liquefied natural gas (LNG) exporters.
Today, the country has one of the highest gross national incomes (GNI) per capita in Latin America and the Caribbean (US$17,640 in 2015) and following suit, is Guyana.
GUYANA CONTINUES TO DRIVE ITS ENERGY INDUSTRY FORWARD
Meanwhile, Guyana’s Vice-President Bharrat Jagdeo, has spoken of the importance of monetizing the country’s natural gas resources and creating new revenue streams sources before the global energy transition reduces demand for fossil fuels.
Guyana’s leadership is working with technicians and consultants on a national strategy for using natural gas as a feedstock for petrochemicals and LNG.
Notwithstanding this, Guyana’s government is constantly updating the nation’s oil and gas legal framework to ensure that there are ongoing investment and benefits for the Guyanese people.
An example of this is the proposed Petroleum Activities Bill, which includes safety and emergency response measures, along with supervision and monitoring requirements, capacity-building requirements for energy companies, and a framework for permitting petroleum product transportation and treatment.
It also includes cross-border unitisation, a legal framework for developing and allocating petroleum reserves that span across Guyana’s maritime boundaries with other countries.
Perhaps one of the best examples that Guyana is setting is that it approaches its oil and gas industry with a sense of urgency. Urgency to get as much value as possible from its petroleum resources, it gets policies right, so the country can continue attracting investments and reaping the benefits they offer.
This sense of urgency, as much as the oil and gas resources beneath the ground, is why Guyana is making headlines for being an oil and gas hotspot. (Energy capital power)