Guyana, the tiny English-speaking South American country, is poised to become the next big oil producer in the Western Hemisphere, attracting the attention and investment dollars of some of the biggest oil companies in the world.
This week, ExxonMobil and Hess announced the successful drilling of a deep-water exploration well that may soon confirm that the seafloor beneath Guyana’s coastal waters contains one of the richest oil and natural gas discoveries in decades. Experts estimate that one of its offshore fields, known as Liza, could contain 1.4 billion barrels of oil mixed with natural gas, comparable to some of the larger fields drilled in South America.
With a population of fewer than 1 million people, Guyana — Venezuela’s eastern neighbour on the continent’s north coast — would be able to export nearly all of the oil it produced, probably starting around 2020.
The companies’ announcements came only days after the Guyanese government announced its intention to build a $500-million petroleum processing and service centre on Crab Island, an enormous investment for one of the region’s poorest countries.
Early rough estimates by experts of how much recoverable oil Guyana could have range to more than 4 billion barrels, which at today’s prices would be worth more than $200 billion. But the country, which currently produces little energy, sorely needs pipelines and other infrastructure to begin a major production and export effort.
“It’s not often that a country goes from zero to 60 so fast like this,” said Matt Blomerth, head of Latin American upstream research for Wood Mackenzie, an energy consultancy.
Industry excitement over Guyana was stirred by a widely distributed report on Friday by the firm that said: “Guyana is rapidly joining the ranks of serious oil and gas players.”
The discovery is one more indication that South America is becoming a critical supplier to world oil markets. Brazil and Colombia are already major producers, and Argentina took a big step in the same direction this week when Chevron and several other international oil companies pledged to invest at least $5 billion this year and billions more in the years to come in the shale field in Patagonia known as Vaca Muerta, or Dead Cow.
Neither ExxonMobil nor Hess would estimate how much oil was found in a field called Payara, a few kilometres from the well drilled by Exxon Mobil in the Liza field. More tests are to be done.
The Payara field is part of a block of 6.6 million acres that ExxonMobil is exploring with Hess Guyana Exploration and CNOOC Nexen Petroleum Guyana, a Chinese-owned company.
“This important discovery further establishes the area as a significant exploration province,” Steve Greenlee, president of ExxonMobil Exploration Co, said in a statement.
Hess chief executive John Hess said: “We believe that the resources recently discovered are significant.”
With ExxonMobil’s global fields ageing and its new interests in Russia frozen by US sanctions, the discoveries in Guyana have the potential to add significant reserves to the company’s holdings.
Rex Tillerson, the former ExxonMobil chief executive, was scheduled to travel to Guyana to meet with its president, David Granger, but the trip was cancelled when Tillerson was nominated to become secretary of state under Donald Trump.
The US State Department has been trying to prepare Guyana for its potential oil rush with a programme that advises the government on environmental regulations, financial arrangements and other forms of oversight.
Environmentalists have cautioned that involvement with the Guyana project would create a conflict of interest for Tillerson should he be confirmed by the Senate. Tillerson has said that if he is confirmed, he would recuse himself from any decision that might affect ExxonMobil for one year and to consult with ethics officers at the State Department after that.