Green and black

Guyana's huge bet on a carbon and oil constrained future

Guyana is forecast to be one of the largest incremental sources of global oil supply growth over the next decade.

For a relatively poor South American country facing a sudden influx in capital, the risk is that politicians will be tempted into splurging on all kinds of projects; some useful and productive maybe, but most likely to be pet political projects that risk undermining Guyana’s future.

Guyana is also one of only a few countries (as well as Gabon and Bhutan) that are net sequesters of carbon. In a carbon constrained world the carbon embedded in the forests of “green superpowers” such as Guyana is a valuable resource worth protecting.

The decision to sell sovereign carbon credits linked to the protection of Guyana’s pristine rainforest is a means by which the country can raise revenue, one that is likely to rise in value as the rules around global carbon trading develop. It also has the effect of tying the governments hands and that of future administrations from making the same mistake as many of its neighbours - the destruction of its rainforest.

The new Guyana on the block

Guyana is very new to the oil production scene. Since their initial discovery in 2015, ExxonMobil and its partners Hess and CNOOC now lay claim to reserves totally some 11 billion barrels, located some 200 kilometres off the coast of Guyana. Even though it only began producing oil in late 2019, output has already grown to ~400 thousand barrels of oil per day.

However, it’s the country’s future potential that is interesting. Based on projections from ExxonMobil and Guyana’s government, oil supply is expected to grow to 1,200 thousand barrels of oil per day by 2027. If it achieves it that will match the production growth witnessed in the heyday of the Canadian oil sands’ between 2010 and 2015.