The latest oil boom targets the north of Latin America

The small South American countries of Guyana and Suriname are at the center of the recent oil boom in Latin America. A series of oil discoveries that ExxonMobil has made in its Stabroek block off the coast of Guyana since 2015, where the global energy giant estimates the block contains over eight billion barrels of recoverable oil resources, has caught the attention of the international oil industry. This is not only due to the sheer volume of discoveries, but also to the extremely low break-even prices estimated at $ 35 a barrel and declining associated with drilling in offshore Guyana. By some estimates, the break-even price in the Stabroek block has already fallen below $ 35 per barrel. The second phase of Liza development, which will begin operations next year and increase the production capacity of the Liza oil field to 340,000 barrels per day, is expected to produce crude oil at an extremely low break-even price of $ 25 per barrel. The quality of the crude oil found is another factor that explains the great interest in the Guyana-Suriname Basin. Exxon pumps relatively low sulfur, light API grade crude oil at its Liza-1 oil field in the Stabroek block and, after the Government of Guyana approves its Payara project, expects to pump 750,000 barrels a day through 2026. The energy super major plans to install up to 10 FPSOs in the block, five of which should be operational by the end of 2026. In a global operating environment where cost cutting is a major focus for oil companies after the oil price slump in March 2020, the demand for lighter, sweeter crude oils is rising and offshore Guyana is growing in popularity. Even the most recent disappointing drill results from Exxon in Guyana have done little to detract from this growing interest. In November 2020, Exxon announced that although hydrocarbons had been discovered in the Tanger 1 well in the Kaieteur Block, which is adjacent to the Stabroek Block, the find was not economical to operate on a stand-alone basis. Thereafter, the integrated oil company was unable to find any more oil in the Hassa-1 exploration well, which was sunk in the productive Stabroek Block earlier this month. Earlier this month, Exxon announced that the Bulletwood-1 well had been drilled in the Canje Block off the coast of Guyana, adjacent to the Stabroek Block. The integrated oil company, which owns a 35% stake in the block, is also the operator. The remaining shares are also held by Total with 35%, JHI Associates with 17.5% and Mid-Atlantic Oil & Gas with the remaining 12.5%. This is the first well on the Canje Block and will target a Liza-style geological formation from the Late Cretaceous and Campanian that contains an estimated 500 million barrels of oil. It is hoped that despite the recent setbacks for Exxon in the offshore of Guyana, the company will repeat the resounding success it had with the Stabroek block.