– as US federal energy analysts project current oil prices to hold
With the US Energy Information Administration (EIA) estimating that crude prices will continue to average US$72 per barrel throughout the remainder of the year, Guyana is likely to earn a windfall $72 million per lift for the remainder of the year.
According to the US EIA’s short term energy outlook, Brent crude is likely to average US$72 per barrel throughout the second half of 2021, although this price is expected to drop to US$67 per barrel in 2022. But Guyana, which has been lifting one million barrels of oil at each lift, could take advantage of these oil prices at market value.
“Brent crude oil spot prices averaged $75 per barrel (b) in July, up $2/b from June and up $25/b from the end of 2020. Brent prices have been rising this year as result of steady draws on global oil inventories, which averaged 1.8 million barrels per day (b/d) during the first half of 2021 (1H21) and remained at almost 1.4 million b/d in July. We expect Brent prices will remain near current levels for the remainder of 2021, averaging $72/b from August through November.”
In the same breath, EIA said that the continuing growth in production from the Organisation of the Petroleum Exporting Countries (OPEC) is likely to be one of the factors in the continued growth in production into next year.
OPEC had previously cut its oil output by 10 million barrels of oil a day during the COVID-19 pandemic. At the time this was a record cut that amounted to 10 per cent of world demand. They have since eased the cuts to around 5.8 million barrels per day as of last month.
“However, in 2022, we expect that continuing growth in production from OPEC+ and accelerating growth in US tight oil production—along with other supply growth—will outpace decelerating growth in global oil consumption and contribute to Brent prices declining to an average of $66/b in 2022,” EIA said in its report.
It was announced last month that Guyana was on the hunt for a new crude marketer, with a new Invitation for Bids (IFBs) being issued for companies who will vie for the chance to market the oil currently being produced offshore Guyana by oil giant ExxonMobil and stored in the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel.
According to the IFBs issued by the Natural Resources Ministry, interested firms were invited to submit their bids by August 3, 2021, to the National Procurement and Tender Administration Board (NPTAB).
“The objective of the assignment is to competently maximise the value of the Government’s crude oil entitlement from Liza Destiny FPSO in the Stabroek Block and create a competitive market for the Liza blend,” the IFBs said.
Guyana, with US oil giant ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being banked in the New York Federal Reserve Bank, where it is earning interest.
In March 2021, the Natural Resources Ministry had disclosed that to date, a total of 5,009,797 barrels of oil worth US$246.5 million have been lifted. This sum, added to the royalties the country receives, took the total in the NRF account to US$267.6 million. And if one considers earnings from the sixth lift in April and royalty payments, this amount is expected to have climbed to over US$300 million.
Guyana received its first payment of US$54.9 million for an oil lift dated February 19, 2020. The second lift on May 21, 2020, was valued at US$35 million; while the third lift, which occurred on August 9, 2020, was worth US$46 million.
The fourth lift of oil offshore Guyana occurred on December 9, 2020, and came in at US$49.4 million in value. And on February 5, 2021, some 997,420 barrels of oil were lifted from Liza Destiny. A sum of US$61 million was paid for that lift.
Already, ExxonMobil has established an ambitious oil exploration plan for 2021 offshore Guyana. Over the past few months, Exxon has been drilling simultaneous deep-water wells in both the Stabroek and Canje Blocks.
In March 2021, ExxonMobil secured a sixth drillship, the Noble Sam Croft, for exploration and evaluation drilling activities offshore Guyana. A fourth project, Yellowtail, has been identified within the block with an anticipated start-up in late 2025 pending Government approvals and project sanctioning.
This project will develop the Yellowtail and Redtail fields, which are located about 19 miles (30 kilometres) southeast of the Liza developments. With the Liza Phase 2 and Payara developments on track for their scheduled completion and the Liza Phase 1 development averaging 120,000 bpd, Guyana’s oil production is likely to exceed 500,000 bpd by 2024.
