Guyana prefers to sell as much oil as possible to joining OPEC
Guyana, home to one of the most prolific and promising oil production discoveries in recent years, is not interested in joining OPEC, for good reason.
The small South American nation of 800,000 inhabitants which borders Venezuela, a founding member of OPEC, wants to pump crude oil as soon as possible, to take advantage of the global demand for oil still growing in this decade and to revive its economy and build infrastructure thanks to huge oil revenues.
It is therefore not surprising that Guyana does not want to officially join OPEC, where it would be forced to reduce production in concert with other members of the cartel and the wider OPEC+ group to support oil prices.
Guyana's goal is to maximize its massive oil discoveries and open up the acres for further exploration, in the hope that operators will replicate ExxonMobil's success in finding billions of barrels of oil equivalent off the coast of the country. After all, if in 2035 some countries no longer sell petrol or diesel cars, what will happen to a large part of oil production?
OPEC is trying to get Guyana involved, the Wall Street Journal reported this week.
However, Guyana will not join the cartel, as Vice President Bharrat Jagdeo says.
“ Right now, the idea is to get these resources out of the ground as quickly as possible, as we're not sure what window we have into the future ,” Jagdeo told the Journal.
OPEC itself denied reports that it would invite Guyana to become a member.
“Although the Organization recognizes that Guyana is an emerging player in the international oil market with significant potential, OPEC has not invited Guyana to become a member of the Organization,” the cartel said.
Indeed, Guyana has enormous potential to increase its oil production this decade.
It became the world's newest oil-producing country in 2019 after ExxonMobil and its partner Hess Corp started production from the Stabroek block, where the companies have found more than 11 billion barrels of oil equivalent to date.
Guyana currently produces about 380,000 barrels a day of crude oil, all from wells operated by Exxon. The goal is to triple production and pump 1.2 million barrels per day by 2027.
Guyana's government wants to welcome more foreign operators into the already booming oil industry and economy, and will organize the first round of offshore licensing in mid-August, while finalizing a new model of production and sharing (PSA) and related regulations.
The multinationals Shell and Chevron, as well as the Brazilian state oil company Petrobras, would be among the ten companies considering the possibility of participating in the licensing round.
According to the International Energy Agency (IEA), in its annual Oil 2023 report with projections to 2028, Guyana, together with the United States and Brazil, is expected to lead the growth of oil production and expansion of producer capacity external to OPEC and the OPEC+ alliance this decade.
Medium-term capacity expansion plans are expected to lead to an increase in supply of 5.1 million bpd from non-OPEC+ producers by 2028, with increases led by the United States, Brazil and Guyana.
By comparison, all of the current 23 OPEC+ members will see a net capacity gain of 800,000 bpd by 2028, with capacity expansions in the largest Middle Eastern producers – Saudi Arabia, Iraq and the United Arab Emirates (UAE) – offset by declines in Russia , Africa and Asia, according to the IEA.
As Guyana's production grows, the country will become an increasingly influential market force beyond OPEC's control. But the Latin American country wants to generate oil revenues as long as it is able to do so and capture a larger share of the market, while global oil demand is still growing.
“It seems a bit crude to say that our depletion policy is to get as much oil out of the ground as possible as quickly as possible,” Vice President Jagdeo told the Journal. "We don't want to be part of OPEC right now."
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The article Guyana prefers to sell as much oil as possible to join OPEC comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-guyana-preferisce-vendere-piu-petrolio-possibile-allentrare-nellopec/ on Sat, 01 Jul 2023 19:55:01 +0000.