Passengers arriving at Cheddi Jagan International Airport just south of Guyana's capital do not have long to wait to see first-hand how a recent oil boom is transforming the economic fortunes of this tiny South American nation.
In the arrivals hall, visitors are greeted with billboards advertising everything from heavy machinery to elite security services and banking. And on the hour-long drive into Georgetown, signs of a construction spree are everywhere as work crews lay fresh tarmac on a road lined with lumber yards and building firms.
Yet the once-in-a-generation oil discovery at the giant Stabroek block 120 miles off the coast of Guyana by an ExxonMobil-led group in 2015, which has catapulted the once impoverished nation into the world's fastest-growing economy, is still in its early stages. And Guyana's emergence as the newest petrostate will see the former British colony with a population of 800,000 become a key source of non-Opec supply growth, with output due to rise to 1.3mn b/d by the end of the decade from 650,000 b/d this year as new projects come on line.
ExxonMobil's experience in Guyana has been extraordinary, and Stabroek's full potential has yet to be fully tested. "In most basins, this takes even two decades to get to the point from discovery to development. Here we are a decade in — we're already at 650,000 b/d and yet we are still very much exploring the basin and testing for new plays," the US major's Guyana president Alistair Routledge tells Argus. With two and a half years yet to run on its exploration licence, "there's another third of the block that we haven't been able to access as yet", he says. "The running room here in Guyana remains exciting."
But many locals complain that the country's newfound oil windfall has been slow to trickle down to the general population, while poverty rates remain high, especially in rural areas. And a dependence on oil also risks leaving Guyana, located on South America's northern coast bordering Venezuela, Suriname and Brazil, at the mercy of volatile commodity markets. The jobs bonanza that followed the discovery of billions of barrels of crude is welcome, but taxi drivers grumble that training to get a foothold in the oil and gas industry is expensive and can be difficult to come by. That has led the government to offer free tuition and expand training opportunities. Its record on spreading the benefits of the country's oil boom will be put to the test in national elections later this year.
Security concerns
For the hundreds of industry executives who descended upon the Guyana Energy Conference and Supply Chain Expo this month, sharing in the spoils of the oil boom was the key draw. Outside the venue, dozens of booths were crammed into an exhibition centre. Travel operators, shipping brokers and a real estate firm pitching Guyana's first Florida-style gated community competed for the attention of conference attendees alongside oil and gas service providers. There was also a disproportionately large number of private security firms, with one offering services ranging from defensive driving to tests for substance abuse and first aid.
Inside the conference, government ministers talked up their efforts to diversify the economy as well as manage the country's new oil riches at the same time. Keen to avoid being tagged with the "oil curse", whereby nations that make sudden discoveries often end up worse off because of mismanagement, Guyana is boosting its non-oil sector including agriculture, mining, tourism and construction. "So far, we've been doing a good job," natural resources minister Vickram Bharrat said when asked if the nation could avoid a similar fate as some of its less fortunate predecessors. That has led to up-and-coming producers from Suriname and Namibia beating a path to its door as they seek to learn how Guyana has handled its oil wealth in such a short period of time.
Ahead of the elections, the main opposition party has made noises about renegotiating the terms of Guyana's production-sharing contract (PSC) with the ExxonMobil-led consortium. The current administration has ruled out such a move for fear of alienating foreign investors, even though it concedes the terms of the contract could have been better. "Our position has been crystal clear," Bharrat told Argus. "We are not renegotiating the Stabroek PSC," he said. For its part, ExxonMobil has cautioned against any move that would undermine its long-term investment plans and called for contract terms to be respected.
ExxonMobil, operator at Stabroek with a 45pc stake, says 2025 is shaping up to be a "very pivotal" year for the company in Guyana as the pace of projects speeds up. ExxonMobil also acknowledges the Guyanese government's impatience for faster progress on natural gas developments.
"We want to move quickly," Routledge told the energy conference. "But for those in the industry, you will understand the additional complexity and challenges that gas brings." That includes higher transport and storage costs than oil as well as a lower energy density. Initial plans include a gas-to-energy project to fuel a power plant, for which the pipeline segment is already complete. And ExxonMobil sees further opportunities to build out gas production to potentially support data centres behind the artificial intelligence boom, and a fertilizer plant, as well as accessing global markets through LNG technology.
Disputed land
On the eve of the energy conference, six Guyanese soldiers were wounded in a border skirmish with a suspected Venezuelan gang, risking a further escalation in long-running tensions between the two nations. Venezuela has long laid claim to the resource-rich Essequibo region, which covers two-thirds of Guyana's territory. The territorial dispute has only worsened since Guyana's unprecedented offshore discovery, with Venezuela at one stage threatening to annex the region. The issue has been referred to the International Court of Justice, but Venezuela has disputed the court's jurisdiction. And in the meantime, Guyana has forged closer military ties with the US.
The US ambassador to Guyana has noted that US secretary of state Marco Rubio wasted no time in touching base with the nation's president Irfaan Ali, calling him seven days into the start of the new Donald Trump administration. According to the readout of their conversation, Rubio doubled down on US support for Guyana's sovereignty in the face of the "bellicose actions" of Venezuelan president Nicolas Maduro and his "cronies". With the new US administration indicating this week that it may once again tighten sanctions on Caracas by not extending a sanctions waiver there for Chevron, cross-border tensions with Georgetown may remain high.
But Guyana's government is sitting on the sidelines while a dispute between ExxonMobil and rival US major Chevron over the future of US independent Hess' 30pc stake in Staebroek plays out. Chevron's pending $53bn takeover of Hess was largely driven by that stake, but ExxonMobil argues it has a right of first refusal for Hess' share. An international arbitration case will resolve the issue in May. ExxonMobil will remain operator whatever the outcome, Routledge tells Argus. "Our position was clear from the start," Bharrat says. "If that was not going to affect the operations in Guyana — and we were told it will not — then we are fine." Guyana has a "good relationship" with Hess, which has agreed to buy carbon credits from the government, he says. "We have no issue with Chevron coming in either. Chevron would add value to the Guyana basin."
