ABIS Energy is passionate about Guyana. We have been engaged with the Guyana economy for the past 4 years and foresee a bright future.
The Guyana Chamber, the GCCI came to Aberdeen at our invitation November 2018. We brought them back again in 2019. ABIS facilitated the partnership between the Aberdeen Chamber and the GCCI, and was the prime mover in the twinning of Aberdeen and Georgetown. It also brokered education partnerships with, The University of Aberdeen, Heriot Watt and the University of Guyana.
The Guyana economy and Covid
The Cooperative Republic of Guyana has lived a charmed life throughout the turbulence that has been 2020.
Globally, 2020 has been difficult and continues to be so. COVID has wreaked havoc on the global economy, this in turn has impacted global trade and the supply chain, reducing the demand for energy and depressing prices for oil and gas producers.
At the time of writing the first of the COVID vaccines, Pfizer, has come to the market. The first vaccinations have taken place and roll out programmes are being prepared.
The Guyana economy has weathered the COVID storm tolerably well with, circa 3000 confirmed cases, circa 2500 recovered and approximately 125 deaths to date.
A new Administration has been sworn in. The new Administration has presented its emergency budget, incorporating significant fund allocations to mitigate COVID impacts.
Guyana airports have reopened for international travel and the stress on the nascent oil and gas industry has mitigated.
The general economy has remained resilient during this. Domestically exports are down by 10% to 15%, however imports are up by approximately the same percentages.
The domestic retail market has seen fluctuations in supply and demand, on the one hand stockpiling has driven up consumable sales, whilst on the other COVID, plus restrictions of local market activity, has negatively impacted 2020 domestic economics.
The state of play in oil & gas
ExxonMobil projects, Liza I and Liza II continue apace. Liza I has been in production for some 12 months, government received revenues circa US $150m and the reservoir continues to produce reliably. They were the usual start-up issues e.g. well stabilisation and produced gas management. However, Stabroek continues to be an exemplary project and production facility.
Lisa II Hull and Production facilities are on track, Payara has been sanctioned, the development programme continues.
The new Administration has confirmed that it will not be revisiting the Govt/EEPGL Production Sharing Agreement (PSA).
ExxonMobil is the subject of intense speculation from the markets. Investors are concerned with business strategy and returns, that plus compliance with the current Environmental and Transition initiatives. ExxonMobil has responded by delisting from the Dow, revisiting the corporate structure and the strategic investment programme.
ExxonMobil has announced asset write-downs, global divestments and a draconian reduction in CAPEX expenditure.
Going forward, ExxonMobil has announced that it will focus its investment in the Permian Basin and the Continental Shelf offshore Guyana.
It is difficult to overstate the importance of this decision for the future Oil and Gas industry in Guyana. ExxonMobil remain the only IOC on the Guyanese continental shelf with a coherent and properly funded Exploration and Development strategy. There are other players, IOC/NOC and small to mid-size Oil Co’s, variously operated or non-operated, however none have committed to fund a comprehensive programme.
It should also be noted that the presence of the Tier 1’s and the developed service capacity in Guyana are there courtesy of ExxonMobil Exploration Development and Production activity.
Key players in 2021
ABIS believe that 2021 will start to deliver some strategic clarity to the Guyana Oil and Gas province. The development of the Orinduik, Kanuku and Canje properties will offer clues to the identity of likely consortiums that have the deep pockets required to mount an Exploration and Development Programme in what is an exclusive US$100m per Well Club.
In terms of infrastructure, there remains a significant gap between demand and capacity. This is masked in the short term by the provision of supply side support to ExxonMobil from the global Tier 1’s.
Regionally Suriname is on track to become an important oil and gas player. Block 58 is as significant as Stabroek. Total will be the Operator of Block 58.
ABIS believes that Total that will become a major regional player.
There is evidence of Middle East interest in the region. There was a recent visit to Guyana by a UAE delegation. Total have introduced Qatar Petroleum as part of their global strategy.
ABIS believes this is healthy for the region, creates competition. The Middle East gets experience of developing frontier territories whilst the established IOC’s/NOC’s get access to 3rd party investment.
Meantime, the new Guyana Administration has reaffirmed efforts to develop a framework of co-operation between Guyana and Suriname. Public Infrastructure & Transport, Health and Environment, Oil and Gas, Trade and Private Sector initiatives, are all part of the package.
The future for investment in the Guyana economy
The Guyana economy is an attractive destination for international investment, both energy and non-Oil and Gas projects.
The Oil and Gas industry Guyana is a 25 year plus business. On its own the industry will develop support services and capacity. In parallel the domestic economy will develop and provide capacity as it grows. Domestic spending power of the community and business will increase markedly drawing in investment capital.
We see many business development opportunities, Infrastructure, Power Generation, Gas to Power, Roads and Transport, Construction, Port Development, the Entertainment Industry, Information Technology to name but a few, all will benefit from investment.
The next decade in Guyana offers investors stability, resources and capacity plus development returns.
The Cooperative Republic of Guyana can look forward to the New Year of 2021 with a degree of optimism and expectation.
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