International firms face deadline to market Guyana’s oil
Today marks the deadline for international oil companies to submit bids to the Guyanese government to market the state’s share of oil extracted by ExxonMobil.
Since 2015, over a dozen discoveries of offshore oil deposits have led to frenetic investment by the US oil major ExxonMobil, which began production last year and eyes a high-margin return thanks to a favourable agreement signed with the Guyanese government in 2016.
As Guyana lacks a national oil company, the state’s share of oil production will be marketed by an independent company on a one-year contract. In February, a similar contract paid Guyana $55 million for a one-million-barrel shipment, a price comparable to the Brent market price in February of $56 per barrel.
The newly discovered oil reservoirs could drastically transform Guyana’s economy: with over 8 billion barrels of proven reserves, Guyana is expected to sustain significant growth for years to come. However, if the resource is not managed correctly by the inexperienced and divided Guyanese government, the country’s transitioning economy could fall victim to an overdependency on oil due to a precipitous drop of non-energy exports. Such dependency could expose vulnerability to short-run shifts in oil demand and seriously impair Guyana’s economy in the long-run, particularly as the globe shifts to renewable energy sources.
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