By virtue of its oil and gas investments, Guyana is leading the Caribbean as the country with the largest number of Foreign Direct Investments (FDI). Guyana’s natural resources sector, in fact, accounted for 99 per cent of FDI inflows for 2022.
This is according to the annual report Foreign Direct Investment in Latin America and the Caribbean 2023 released by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
According to the report, Guyana’s FDI inflows totaled US$4.389 Billion- the highest in the Caribbean. It is a similar result to the record inflows in 2021. All in all, Guyana played a critical role in the overall 55.2 per cent rise in FDI in the Caribbean- a historic rise.
“The performance is due, once again, to foreign investors’ interest in the country’s hydrocarbon sector. Hence, the natural resources sector accounted for 99 per cent of FDI inflows into the country in 2022, although inflows into the sector were 2 per cent lower than in 2021. Manufactures (which represent 1 per cent of the total) also recorded a drop, of 9 per cent,” the report said.
“The change in FDI inflows in the Caribbean was positive, driven (also) by higher levels of investment in the Dominican Republic, which despite the greatest increase ranked second as a recipient country after Guyana, while investment fell in countries in the Organization of Eastern Caribbean States (OECS).”
According to the report, the rise in FDI project announcements in Latin America and the Caribbean was mainly a result of a higher number of projects in Guyana, Mexico, Brazil, and Panama. In Guyana’s case and the Caribbean in general, companies from the United States were responsible for a significant chunk of these investments.
“Growth in announced investments in Guyana put the country in third place among the countries with the highest value announcements. This position is a result of hydrocarbon production in the country, which has led to announcements of large investments,” the ECLAC report said.
“The United States remained in the leading position, with a share of 38% of the total (a rise of 186% in 2021). The most noteworthy projects originating from the United States include oil extraction projects in Guyana and automotive industry projects in Mexico.”
The report noted that six investment projects in Guyana were announced in 2022, including an oil exploration project announced by the United States company ExxonMobil for US$10 Billion. In giving an idea of the size of these projects with respect to Guyana’s economy, ECLAC pointed out that in 2021 Guyana had a Gross Domestic Product (GDP) of US$ 6.8 Billion and a population of 800,000.
According to ECLAC, the type of projects announced in Guyana in 2022 indicate that the country’s hydrocarbon sector will continue to receive large investments in the coming years. In fact, Guyana is one of six countries that accounted for US$7.2 billion in FDI from global sources.
“It is possible to identify FDI entering the hydrocarbons sector in six of the region’s countries (Brazil, Colombia, Guyana, Mexico, the Plurinational State of Bolivia, and Trinidad and Tobago).9 Between 2000 and 2022, these six countries absorbed an annual average of US$ 7.214 billion channeled to the sector,” ECLAC said.
As the world’s fastest-growing super basin in recent years, Guyana is estimated to have potential resources in excess of 25 billion barrels offshore. In the oil-rich Stabroek Block alone, which is operated by ExxonMobil and its co-venturers, there are nearly 11 billion barrels of oil equivalent.
To date, there have been some 35 discoveries in the Stabroek Block, where production activities have been ongoing since 2015, and a total of 40 oil finds for all blocks being explored offshore in Guyana.
ExxonMobil, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), is the operator of the Stabroek Block and holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
Currently, Liza phase 1 and phase 2 developments in the Stabroek Block are operating at a combined gross production capacity of more than 360,000 barrels of oil per day (bpd) using the Liza Destiny and Liza Unity floating production, storage and offloading (FPSO) vessels, respectively.
The third development in the Stabroek Block – Payara – is on track to come online by the end of 2023 with a gross production capacity of approximately 220,000 bpd. While this may be the gross production capacity, it is expected that the startup will see a much smaller number of oil barrels being produced. For instance, when Liza phase two started in 2022, it was producing significantly less than its current production.
Meanwhile Yellowtail – the fourth development – is slated for 2025 with a production capacity of some 250,000 bpd. Both these development projects have been approved by the Guyana Government.
Uaru is the fifth development and is expected to come online at the end of 2026 with a gross production capacity of approximately 250,000 bpd with the first oil anticipated at the end of 2026. The development plan for Uaru was submitted for Government approval in November 2022 and it has also received project approval.
ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027. They are meanwhile seeking project approval for their sixth oil development in Guyana’s waters, approaching the Environmental Protection Agency (EPA) for environmental authorization for its Whiptail Project.
