On the northern edge of South America, nestled between South America’s oil and gas giants are the nations of Suriname and Guyana. Their resources have historically been somewhat limited and their GDPs’ commiserate with limited economic activity, however the recent oil and gas discoveries offshore their waters has injected hope into these neighbouring economies.

In the post-Covid era of creating cost and operating efficiencies, the cheaper costs of production (Between $30-40 per barrel) coupled with proximity to major oil operators – has elevated the popularity of these newfound offshore fields and igniting excitement in a sector looking to climb out from its trough.

By partnering with a number of the oil majors, both Suriname and Guyana have enjoyed continued exploration successes throughout their shared Guyana Basin. The likes of ExxonMobil, TOTAL, CNOOC and Qatar Petroleum have each sought to grow their operational and ownership capacity in the region.

The high-quality light, sweet crude oil found in the Guyana Basin is an attractive sight to the integrated oil majors seeking to maximise their downstream margins.

Suriname

Suriname has announced its most recent round of shallow-water licensing has led to three offshore blocks being awarded to explore Blocks 6, 8 and 58 in the Guyana-Suriname Basin. The licensees come from well-known international oil companies; Qatar Petroleum, Total Energies & Chevron. However, despite attracting attention from some of the industry’s biggest players, the licensing round saw bids on less than 50% of the blocks on offer.

The state has offered 30-year long production sharing agreements to their operating partners, leases that provide the long-term confidence for oil production – a sentiment sparsely found across the current energy landscape. It will permit these oil companies to begin the extraction of between 3-4 billion barrels of oil equivalent (boe), around ‘half of the new oil and gas discoveries made in 2020’.

This reluctance has its roots in the Covid oil price crash and global demand contraction, that has understandably forced all oil producers to re-evaluate and reconsider both CapEx and OpEx being deployed to new projects.

Yet as the muddied waters of 2020 begin to clear, it is the likes of Suriname and Guyana that are attracting the attentions of oil and gas players who see the deep value in low-cost, low-carbon production.

Guyana

Guyana has most notably partnered with ExxonMobil to explore and exploit their offshore resources. This partnership has been boosted in the past month by a ‘significant’ discovery in the Whiptail-1 well with Hess Oil, that will add to the already proven reserves of 9 billion boe. The 6.6 million acre Stabroek block has continued to prove its worth, the Whiptail-1 find adds to the earlier discovery in the Uaru-2 well alongside the oil found in the Uaru-1 well.

Whiptail-1 has about ‘246 feet (75 meters) of net pay in high quality oil bearing sandstone reservoirs, found beneath 5,889 feet (1,795 meters) of water by the Stena DrillMAX’. The adjacent Whiptail-2 well also has roughly 167 feet (51 meters) of net pay in high quality oil bearing sandstone reservoir. In both wells Exxon is testing for deeper reservoirs.

Assisting the production of these wells is the Liza Destiny FPSO vessel that is refining 120,000 barrels per day, soon to be joined by the Liza Unity FPSO that is to arrive in Guyana from Singapore in early 2022. The new vessel will nearly triple production capacity with an additional 220,000 barrels per day.

Despite the Covid-related project delays, ExxonMobil anticipates a total of six more offshore projects to be in operation by 2027. In anticipation of these developments, the Guyanese government has tendered for the development of a new port to create a more efficient and robust oil and gas infrastructures, including; pipelines, dry dock, an offshore terminal, fabrication yard, gas storage – among others.

The end-product will be a domestic sector that is ready to serve an international market and that will benefit domestic access to energy.

For both Suriname and Guyana, their lack fo access to great resources means that the exploitation of these sectors is crucial to the long-term well-being and development of their communities. While major industrial states should be decarbonising effectively, we should support that underdeveloped nations with access to low-carbon oil and gas – to rapidly and efficiently exploit these precious resources.