A tiny South American country is emerging as a reliable oil supplier globally as flows from the Middle East face disruptions and European nations seek alternatives to Russia.
Guyana's rapid increase in crude production, from zero in 2019 to about 90,000 barrels per day in the first half of the year, is catapulting the country to one of the world's fastest-growing economies, lifting thousands of people out of poverty with newfound wealth.
The non-Opec country's oil output is expected to reach 1 million barrels per day (bpd) imminently, with the country targeting 1.7 million bpd by 2030.
“With disruptions in the Middle East, Guyana’s oil is becoming strategically more important to global markets,” Stephanie Rivera, research analyst at S&P Global Energy told The National.
“Guyana’s light-to-medium, low-sulfur crude is not exposed to Middle Eastern shipping chokepoints, providing refiners with an attractive option for diversifying away from Middle Eastern supply. As the conflict in the Middle East continues, Guyanese crude can help enhance energy security in an increasingly tight market.”
The Middle East conflict, which broke out on February 28 after the US and Israel attacked Iran, has roiled global markets, with prices jumping to an intraday high of about $120 per barrel in April.
Tehran carried out retaliatory strikes on Gulf energy infrastructure leading to curtailment of production, with 10 million bpd of Gulf output remaining shut as of August amid heightened security risks, according to the International Energy Agency report last month.
The Strait of Hormuz, through which more than 20 per cent of global crude and liquefied natural gas supplies used to pass before the war, has been a restricted route since the war began, raising supply concerns.
Europe focus
Countries in Europe, North and South America have been the main importers of Guyana’s oil, but the Middle East crisis has also prompted some Asian countries to look towards Guyana for oil.
Europe imported up to 57 per cent of Guyanese crude between March and August this year, Kpler data shows, with the Netherlands, Sweden, Germany, the UK, Italy, Poland and Spain being the main buyers.
The Americas took about a third, while Asian nations, including China, Thailand, Singapore and Indonesia, imported about 6 per cent of Guyanese crude during the period. Turkey bought roughly 5 per cent.
Another factor that is contributing to a rise in demand for Guyana's crude is the Ukraine war.
European nations are looking for alternative sources of supply as they seek to reduce dependence on Russian crude and squeeze off Moscow’s oil revenue as it continues to wage war against Ukraine.
Guyanese crude is also highly valued for its low sulfur content, high yields of middle distillates such as diesel and jet fuel, and competitive break-even costs of $30–$40 per barrel that "make it particularly attractive to refiners, especially in Europe", Ms Rivera said.
Investment of $60 billion
An oil boom is a recent phenomenon in Guyana, with production starting only seven years ago following the discovery of oil in 2015.
An ExxonMobil-led consortium – including Chevron, and China’s CNOOC have been dominating production, with total investment estimated at between $55 billion and $60 billion at the Stabroek Block.
The group hit a milestone last month by producing its billionth barrel of oil at Stabroek less than seven years after production began in 2019.
“With an estimated resource base of just under 11 billion oil-equivalent barrels and plans for up to eight offshore developments by 2030, the Stabroek block is helping meet demand across the Americas, Europe and Asia, contributing to global energy security and market stability,” ExxonMobil said in a statement last month.
More projects are expected to come online, with Uaru expected to start up by the end of 2026, Whiptail expected to start up in 2027, and Hammerhead expected to begin production in 2029, it added.
Last year, France’s TotalEnergies, QatarEnergy and Malaysia’s Petronas also signed an agreement with the Guyanese government to explore a shallow block off the coast of Guyana for oil production.
Economic boost
Oil revenue, spurred by a rise in production and higher prices, has transformed Guyana from a small, agriculture and services based economy into one of the world’s fastest-growing economies.
From an annual growth rate of 5.4 per cent in 2019, when it first started producing oil, the country’s economy expanded by 43.5 per cent in the following year, 20.1 per cent in 2021, 63.3 per cent in 2022, 33.8 per cent in 2023, 43.8 per cent in 2024 and 19.3 per cent in 2025, International Monetary Fund data shows.
The country's GDP is projected to grow by 16.2 per cent this year, the highest rate globally, as oil revenue continues to increase due to higher production and rising crude prices.
Brent, the benchmark for two thirds of the world's oil, is currently trading at about $100 per barrel.
"The economic outlook [for Guyana] remains highly favourable," the IMF said in July. "Oil production is expected to continue expanding, and the non-oil economy is projected to grow by about 7 per cent on average over the next five years as the government continues its ambitious plans to address infrastructure and developmental needs."
