With more than 35 oil discoveries since 2015 the impoverished South American microstate of Guyana has emerged as the worlds hottest frontier drilling location. Global energy supermajor ExxonMobil is leading the charge by exploiting the prolific offshore Stabroek Block where it has discovered over 11 billion barrels of oil resources. Guyana is on-track to become a leading South American oil producer and exporter with production tipped to exceed 1.2 million barrels per day by 2027, making it the worlds 16th largest petroleum producer. This is delivering a tremendous economic bonanza for Georgetown with Guyana now the worlds fastest growing economy. There are fears, however, that Guyana lacks the requisite governance frameworks to effectively manage the massive windfall generated by oil. This leaves the former British colony at risk of being afflicted by the oil curse that left neighboring Venezuela in political and economic chaos.
Exxons 2015 Liza-1 well in the 6.6-million-acre Stabroek Block, where it is the operator with a 45% working interest with Hess and CNOOC holding 30% and 25% respectively, was the first significant oil discovery in offshore Guyana. Since then, Exxon has reported over 30 discoveries in the block and by April 2023 was pumping nearly 400,000 barrels per day from the Liza oilfield with two floating production storage and offloading vessels. Exxon and partners have three further projects underway in the Stabroek Block with the $12.7 billion 250,000 barrel per day Uaru development the latest to be approved. Exxon plans to start the Payara project during the fourth quarter 2023, with commissioning activities currently underway, which will be the third major offshore development. Payara will have capacity of 220,000 barrels per day, which once achieved will boost Guyanas total petroleum output to over 600,000 barrels per day giving Georgetowns oil revenues a healthy boost. Those operations along with the yet to be approved Whiptail project will lift Guyanas oil output to 1.2 million barrels per day by 2027.
Exxon is also proceeding with a relentless drilling campaign in Guyana. During late-April 2023 the supermajor announced a discovery in the Stabroek Block with the Lancetfish-1 well which intersected with 92 feet of oil-bearing sandstone. Nonetheless, the Kokwari-1 wildcat well drilled in the northwest section of the Stabroek Block 37 miles from the Liza-1 well came up dry. Exxon also spudded the Basher-1 and Blackfin-1 exploratory wells during the first quarter 2023. Those form part of a 10 well exploration campaign in the Stabroek Block. During March 2023, Exxon filed an Environmental Impact Assessment with Guyanas Environmental Protection Agency outlining a 35 well drilling plan for the Stabroek Block. Previous drilling successes make likely that Exxon will report further oil discoveries over the course of 2023 which will boost the volume of recoverable oil resources in the Stabroek Block, which were previously estimated to exceed 11 billion barrels.
Exxons oil operations in the Stabroek Block are delivering a tremendous economic and fiscal windfall for Georgetown. The impoverished South America microstate with a population of over 800,000 emerged during 2020 as the worlds fastest growing economy reporting that gross domestic product expanded by a whopping 43.5% that year. Since then, Guyanas economy has expanded at a stunning rate. For 2021, GDP grew by 20% and then a whopping 62% during 2022 with it predicted the economy will expand by a notable 37% in 2023, making it the fastest growing economy of any sovereign state. Guyana is benefiting from a substantial financial windfall from the massive offshore oil boom despite the disadvantageous contract with the Exxon led consortium which leaves the country exposed to financial and environmental risks. According to Guyanas central bank, the South American microstate received $53.3 million in royalties and $143.3 million of profits from oil during April 2023. At the end of April 2023, Guyanas natural resource fund had a balance of $1.67 billion. For 2023, Guyanas finance minister expects oil income to rise by a notable 31% year over year to $1.63 billion. Those sums will continue to grow as oil production expands and Exxon brings additional FPSOs online.
The tremendous revenue from oil flowing into Guyana is being invested in a flurry of infrastructure projects including highways, a deep-water port and a $1.9 billion natural gas to energy project. The deep-water port under construction in Eastern Guyana at the town of Berbice is a key piece of urgently needed energy industry infrastructure.
The port is being constructed by CGX Energy, a 78% owned subsidiary of Canadian intermediate oil producer Frontera Energy. On completion in late-2023 the port will significantly expand Guyanas cargo capacity, including for oil, with the countrys two existing petroleum shipment facilities already operating at capacity with no room for expansion. The port also has the potential to service neighboring Suriname, which is undergoing its own nascent oil boom with it speculated that the impoverished former Dutch colony possess considerable offshore oil potential on par with Guyana.
Guyana is among the poorest countries in South America with swathes of the population living in poverty without access to basic public goods such as clean running water and electricity. Petroleum is delivering an economic bonanza which will lift Guyana out of poverty and see it become South Americas wealthiest country, a mantle once held by Venezuela. There are fears this vast oil wealth will spark the endemic corruption as well as economic and political dysfunction which caused Venezuela to virtually implode. In less than two decades, Venezuelas economy, weighed down by a dictatorial socialist regime that fostered corruption, political chaos and malfeasance, collapsed. Indeed, there was a time when President Hugo Chavez believed the considerable revenue generated by Venezuelas vast oil wealth would never end. Yet by 2015 Venezuelas economy was in ruins weighed down by sharply weaker oil prices and a failing oil industry. Whether this will occur in Guyana is yet to be seen, but there are fears already rampant corruption and existing political instability could create ideal conditions for the oil curse to claim another victim.