By Vijay Jayaraj
“Equatorial Guyana and Suriname have combined oil reserves estimated to be 17 billion barrels of oil equivalent. The biggest hurdle to the extraction of these reserves could come from lack of capital … if the international climate-industrial complex takes a strong stand against their extraction plans and their own governments acquiesce.”
The poverty-stricken Caribbean countries of Guyana and Suriname have hit the jackpot with the discovery of huge offshore oil reserves that are on track to produce revenue for decades.
Opposition from the United Nations and other anti-hydrocarbon entities might hamper the pace of production but won’t stop it. The global need for more crude is too great, and the economic situation of the two South American nations is too dire.
Suriname has been experiencing double-digit inflation for a while now (35 percent in 2020). The inflation rate is now above 50 percent due to the ongoing global energy crunch. Suriname’s economy shrank by 3.5% in 2021. Guyana’s economy is in a similar situation, with 40 percent of Guyana’s 800,000 living in poverty.
All this could change now, thanks to the oil discovery.
Equatorial Guyana and Suriname—situated side-by-side and bounded by the equator and Atlantic Ocean — have combined oil reserves estimated to be 17 billion barrels of oil equivalent. Together this represents the world’s largest oil discovery in the last two decades. Some call it the “the most promising oil discovery hotspot on earth.” Others say it is “the most exciting oil frontier on earth.” In addition, there are gas reserves of more than 30 trillion cubic feet.
According to a Hess Corporation report, the biggest Guyanese oil block—the Stabroek—“is operated by ExxonMobil subsidiary Esso Exploration and Production Guyana” with a 45 percent stake while Hess Guyana Exploration and CNOOC Petroleum Guyana hold 30 and 25 percent stakes, respectively. Guyana will deliver 1 million barrels per day (bpd) in 2027.
In Suriname, TotalEnergies and its partner Apache made discoveries of large oil reserves in what is known as the Block 58 offshore site. Block 58 is “situated on the same petroleum fairway which runs through Guyana’s Stabroek Block.”
Around 2035, the output from Guyana is expected to be around 1.4 bpd and that from Suriname 650,000 bpd, which would put them in the top five oil-producing countries in South America.
Still, analysts believe that output from Guyana could be much higher: “there is every indication, based on the latest developments, that output will be far higher by” 2027. “Government officials in Georgetown [Guyana’s capital] believe crude oil production could reach 1.5 million barrels per day, or more, from as many as 12 Floating Production Storage and Offloading facilities in five years.”
The biggest hurdle to the extraction of these reserves could come from lack of capital. Both Suriname and Guyana have an “underdeveloped capital market with limited financing options” for new projects. These nations will be under severe financial stress if the international climate-industrial complex takes a strong stand against their extraction plans and their own governments acquiesce.
But awareness of this is increasing among leaders who are rushing to cut red tape for foreign investment. Last week, Guyana President Mohamed Irfaan Ali promised that his “government will remove bureaucratic hurdles to smooth the journey for Saudis looking to invest in his country.”
Common sense suggests that the global markets will dictate the development of oil fields in these countries. With a continuing rise in demand for oil forecast by the International Energy Agency, one would expect crude from Guyana and Suriname to sell fast.
This will prove to be a win-win for global supply and the development of local economies. “Suriname’s nascent oil boom is gaining momentum” and will deliver a “significant fiscal and economic windfall,” says Matthew Smith at Oilprice.com,
“Guyana will materialize as a leading global oil exporter with its petroleum output far exceeding domestic demand, while government coffers will swell with annual income expected to be over $10 billion annually in less than a decade,” he says.
The ability of Guyana and Suriname—and their right—to develop economically by utilizing their oil reserves should not be impeded by the climate-frenzied.
Vijay Jayaraj is a Research Associate at the CO2 Coalition, Arlington, VA, and a Contributing Writer with the Cornwall Alliance for the Stewardship of Creation. He holds a master’s degree in environmental sciences from the University of East Anglia, UK, and resides in Bengaluru, India.