Oil price climbing to a point where Guyana can rake in record revenues

An oil supply shortfall is coming and with OPEC+ expected to provide just a fraction of the demand, barrels from producers outside of the alliance, such as Guyana, would be needed even more. Already, dated Brent has soared past $75 a barrel – a two year high – as inventories continue to fall and demand picks up.

This scenario has seen analysts predict the return of a $100 a barrel oil price which would be the highest since Guyana began producing crude at the Liza Phase 1 Development in December 2019. This would see the Guyana government raking in around US$100 million per oil lift.       

The OPEC alliance will meet next week where it is expected to revive some more of its halted output, according to a Bloomberg survey, and delegates from the group say discussions are already underway. Yet with Riyadh determined to proceed cautiously, market watchers expect any increase to leave the market wanting more.

“This market’s on fire,” Bill Farren-Price, a director at research firm Enverus, was quoted by Bloomberg as saying. “The Saudis don’t seem inclined to signal a substantial increase in supplies. But even if OPEC+ adds barrels, prices are going to stay strong.”

According to S&P Global Platts, members will be keen to capture some of the rising demand for oil, without pushing prices down, while they also await the outcome of the stalled US-Iran nuclear deal negotiations.

“Given the more than 5 million b/d spare capacity at the alliance’s disposal, an excessive output increase could have catastrophic repercussions, but it is implausible that the group would jeopardize the achievements of the past year or so by raising production irresponsibly,” said Tamas Varga, an analyst with brokerage PVM Associates.

Market observers widely expect that a hike of some kind will be agreed next week, with the extra supply hitting the market in August. All but two of 15 analysts, traders and refiners in a global survey by Bloomberg News predicted that the coalition will tap its sizable spare production capacity.

Yet the average increase they forecast for August was about 510,000 barrels a day — barely a quarter of the global supply deficit that OPEC+ itself anticipates during that month.

Hess corporation, a co-venturer at the ExxonMobil-operated Stabroek Block has said once an issue with the gas compressor on the Liza Destiny FPSO is resolved, production could ramp up in July.

Exxon says team on track to reinstall FPSO gas compressor this month

“We will be able to walk the production up somewhere between 120,000 barrels of oil per day to 130,000 barrels of oil per day. And then in November of this year, we will do two things, we will take a shut down and we’ll install a new design flash gas compressor to hopefully get it more reliable,” said Greg Hill, Chief Operating Officer (COO) at Hess.

Production capacity for Guyana floaters can increase 10-15%

He also pointed out that the second most important objective of the November shut down would be to debottleneck or optimize the Liza Destiny FPSO facility to have a new nameplate of somewhere between 140,000 to 150,000 barrels of oil per day.

Coming at a time when the world is gradually reopening as vaccination campaigns intensify, additional barrels from Guyana will be welcomed on the global market and would see the country’s revenue from exports increase. Already, it is expected that by the end of this year, the Natural Resources Fund would be holding well over half a billion U.S. dollars.

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Comments

  • Dennis Albert  On 06/26/2021 at 1:34 am

    Supply and demand. I wish Nigeria, Cameroon, Ghana and other African countries to sell more oil at this price level before crashing it down. Don’t let the PPP and their Indocentric people get richer and get more money to promote phantom squads and Russian white nationalist garbage beating up Black Guyanese in the gold mines.

    • Ramesh  On 06/26/2021 at 3:01 am

      “Don’t let the PPP and their Indocentric people get richer and get more money …” Dennis Albert.

      Dennis Albert, your regrettable comment is ignorant, hateful and inflammatory and bears absolutely no relevance to the message appertaining to the above article. You should be duly reprimanded for spewing such unwarranted vitriol against your Guyanese.

      Ramesh

      • Dennis Albert  On 06/26/2021 at 11:44 pm

        1,000+ public sector workers laid off after the PPP became government. 99% of them are viewed as “APNU voters”, “Haitians” etc.

      • Ramesh  On 06/27/2021 at 8:48 pm

        You are misrepresenting the facts. The people laid off were mainly fat-cat, political appointees, some of whom were raking in in excess of $900,000 a month in salary plus benefits.

        Ramesh.

      • Dennis Albert  On 06/28/2021 at 8:09 am

        Those aren’t “fat cats”. The majority work as clerks, receptionists, front desks and clerical staff working for G$70,000 to G$100,000 a month. Hardly fat cats. They drive AT192 and AT212 (1995-1999 second hand Toyota cars) if they can afford it. They own those vehicles for years.

        They don’t drive PZZ series 2018 model luxury vehicles and build large buildings while paying little or no income or property taxes.

      • Ramesh  On 06/28/2021 at 9:51 am

        You are barking in the wind – That is what Grandpa Granger (who was attempting to tief the election) would have you believe.

        But according to the Governance Minister, Gail Teixeira, the list contains mainly political appointees – i.e., APNU+AFC political appointees – “who raked in salaries of up to $900,000 per month” along with benefits such as “refreshment allowance”, among others.

        Ramesh

      • Dennis Albert  On 07/02/2021 at 6:42 am

        Dr. Vincent Adams was a non-partisan man when it comes to environmental issues, even challenging the oil contracts which were negotiated, but all he ever got was a leave leading to a termination.

        Dr. Vincent Adams chose to remigrate and leave his affluent career in the USA to eventually get replaced by a lesser qualified PPP appointee.

        Regarding Grandpa Granger “thiefing” elections, this is the same issue that led to the PPP criminally charging Ferguson for criminal libel against a member of the security forces.

  • Andre Keith fernandes  On 06/26/2021 at 12:34 pm

    Fitting reply Ramesh. keith

    • Dennis Albert  On 06/26/2021 at 11:47 pm

      Given your name is Portuguese, Black people are treated like animals in the Iberian Peninsulan countries of Italy, Spain and Portugal these days. They are treated worse than dogs.

      In Brazil, Bolsonaro described Northern Brazilians as “fat Black and lazy” while raping the Amazon.

      G-d is watching every single corrupt, oppressive and ethnocentric politician. My home, my uncle at Ruimveldt home flood up, but we didn’t vote PPP.

  • brandli62  On 06/27/2021 at 2:43 pm

    High oil prices are good news for Guyana as the revenues feeding the Natural Resources Fund (NRF), Guyana’s Sovereign Wealth Fund, will grow more rapidly than I had previously anticipated. At present, the oil revenues are not being touched as they sit on a bank account in New York. This is good news as the assets are not being used to finance unreasonable projects. The Ali government has promised to implement new guidelines on how to access those funds. If the Guyanese follow the lead of the Norwegian, they will manage the NRF along the lines of the hugely successful Norwegian Oil Fund, which has generated wealth for present and future generations. “It’s a no-brainer” as VP Jagdeo tends to say. Right?!

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