Guyana petroleum sector will help lead country into greater decarbonization: VP

Guyana's petroleum development is just getting started, but it will help steer its population toward greater prosperity, which will allow other industries to flourish – including renewable and alternative energies which are expected to overtake fossil fuels in the future, the country's vice president said Aug. 17.

Moreover, the small country's nearly 800,000 people have a "legitimate expectation" of prosperity that will inevitably result from the more than 9 billion boe of discovered offshore oil and gas resources will bring, Bharrat Jagdeo, vice president of the South American republic, said in webcast remarks in a presentation to the Offshore Technology Conference in Houston.

"The world will continue to use fossil fuels for the foreseeable future," Jagdeo said. "Even if we freeze all new investments now, there's still a $4 trillion dollar industry producing oil and gas for world demand."

Anti-oil and gas activists, including those who have criticized Guyana for developing its petroleum sector when the world is transitioning toward renewables and alternative energies, are "locking this industry in for the incumbents," he said.

A consortium led by ExxonMobil, which includes partners Hess Corp and China's CNOOC, made Guyana's first offshore discovery in 2015. They began the country's first offshore oil production in December 2019 and are now producing 120,000 b/d of oil from the country's Stabroek block where they have so far made about 20 discoveries.

Two other developments have been sanctioned to come online in early 2022 and 2024 respectively.

Desirable crude grade

"Why should we not displace some higher-cost producers?" Jagdeo said, noting that Guyana's crude oil is a desirable light sweet or medium crude grade, in the low 30s API gravity. "If there is no investment in small [producing countries], then effectively we're lobbying for the existing producers. We want to share in the market too."

Guyana has a lot at stake in its petroleum resources, Jagdeo said. The country's per capita income is about US $6,000 today, although the government has set an eventual target of $30,000 as oil wealth extends to the country generally. That compares with about $70,000 in the US and a bit less but still high levels in European nations.

Also, currently Guyana already has net-zero emissions, said Jagdeo, adding that is not expected to change even though ExxonMobil and its partners have targeted about six offshore oil developments by 2027 and should get to 1 million b/d of oil production in this decade.

"People have to understand that we cannot remain locked into a cycle of low-carbon emissions but low income" among the population, said Jagdeo.

The prosperity gained from development of oil and gas resources can lead Guyana toward becoming a force in the energy transition in years to come, he added.

Currently, the country runs "entirely" on bunker fuel and diesel, although in the future it will likely increase its national installed power generation capacity fourfold in terms of megawatts, said Jagdeo.

He noted Guyana is heavily forested – a resource that produces about $54 billion of ecosystems services for the world.

Guyana's government will continue to advocate globally for decarbonization, even as its petroleum sector expands, he said. It has already put in place regulation that will allow the oil and gas industry to develop safely and consistent with world emissions goals, and ensure low-carbon technology is used in oil development.

'Aggressive' local content

For one thing, the country is also pursuing an "aggressive" local content policy. Even though its work force cannot develop production vessels or supply advanced technologies, it can provide vital services such as transportation and logistics.

"We're carving out some sectors for local involvement," the vice president said.

Proceeds from oil development can fund universities to train workers in science and technology which should pay off in more locally owned diversified businesses and an expansion of the economy in other sectors such as agriculture and tourism.

"Right now we import skills through consultants," said Jagdeo. "We plan to spend more money investing in young people particularly so they can manage the [energy] sector way into the future. Right now there's a great urgency to train people with skills for immediate jobs – such as welders and suppliers. It's high on our agenda."

In addition, the country is requiring government transparency in reporting its oil revenues, imposing penalties for violators.

As well, existing permits for ExxonMobil-led projects have "evolved," said Jagdeo. The environmental permit for the first two Stabroek developments, Liza Phases One and Two, were for 25 years but are now for five years.

A new feature of the environmental permits on gas flaring now requires a fee if flaring occurs after the commissioning stage. And there are clauses dealing with enhanced wastewater management and cradle-to-grave waste management, as well as potential oil spills.

"The entire framework for the optimal management of the sector ... has to evolve," Jagdeo said.