Not typically thought of when considering major oil exporters, one small country holds significant potential to join the ranks of some of South America’s much larger oil producing powers.
Guyana, located along the northern coast of South America, is not an oil producer of any significance. But that could change if the large reserves of oil and gas located offshore are successfully produced.
ExxonMobil drilled one well that is causing quite a stir. In May 2015, the company announced that it had encountered oil at its Liza-1 well in the Stabroek Block, about 120 miles off of the coast of Guyana.
ExxonMobil now thinks that its discovery could hold as much as 700 MMbbls of crude. Although it may be too early to tell if ExxonMobil can ultimately recover that much oil, the discovery in the Stabroek Block could be worth as much as $40 billion at current prices.
That is the equivalent to more than 12 times Guyana’s entire GDP. Needless to say, if all goes according to plan, such a volume of oil would change the fortunes of the country.
“A find of this magnitude for a country like ours, which sits on the lower end of the scale of countries in this hemisphere, this could be transformational,” said Raphael Trotman, Guyana’s minister of governance. “From my sense, from speaking to experts outside of Exxon, it has to be something excess of 700 million barrels.”
There are other companies that have acreage off the coast of Guyana, which will undoubtedly see the value of their assets rise after ExxonMobil’s discovery. Hess and China’s CNOOC are working with Exxon on the Liza-1 well. Anadarko and Tullow Oil are sitting on some of the largest acreage off the coast of Guyana. And a small Canadian company, CGX Energy, along with Pacific Rubiales, another Canadian operator, have acreage close to the Liza-1 well. All of these companies stand to benefit as their assets are now more attractive following ExxonMobil’s success.
For now a lot will depend on what ExxonMobil is able to do with the Liza-1 well. The company is optimistic – it says that it may be able to begin production within five years.