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Guyana’s Emergence as Russian Oil Substitute in World Market

Forecasts predict oil production to reach 1.2 million barrels per day by 2027

Guyana’s Emergence as Russian Oil Substitute in World Market

S&P Global’s Richard Swann has identified Guyana’s oil as a potential alternative to Russian Ural oil on the world market. The opportunity arose after Russia invaded Ukraine and faced sanctions from Western countries.

“… maybe it’s a replacement for the Russian Ural… it’s a really big market, a very exciting market, and one that we’re monitoring on a daily basis because it’s one of those rare growth areas for crude oil right now,” Swann said of Guyana during a recent S&P podcast.

Guyana, a relatively new player in the oil market, is making unprecedented progress. Since the start of production in December 2019, it has seen a gradual increase in production. From less than 100,000 barrels per day (vbd) at the beginning of 2020, Guyana’s production has risen to 500,000 vbd by the end of 2023, with projections to rise to 1.2 million vbd by 2027. This expansion is being carried out by ExxonMobil and its partners in the Stabroek block, Hess and CNOOC.

Swann commented: “Our colleague here at S&P Global, Dan Yergin, recently called Guyana the fastest developing offshore oil in the history of the world. And who are we to question his opinion on that?”

The quality of the Guyanese oil is remarkably competitive. Liza Crude, categorized as medium sweet, has a sulfur content of 0.58% and an API gravity of 32 degrees. Unity Gold boasts of a 34.5 API and a sulfur content of 0.41%, while Payara, although heavier, is valued at a premium, with a 28 API and 0.58% sulfur content. In comparison, Russian Ural oil, previously a major player for Europe, typically has an API gravity of about 31.78ยฐ and a higher sulfur content of about 1.35%, according to Energy Intelligence.

Guyana, with its favorable oil characteristics and increasing production capacity, is in a good position to fill the vacuum created by Russian Ural oil, especially in markets that have traditionally relied on it. Following the introduction of sanctions and price caps by Western countries, the reorientation of Russia of its oil exports to South and East Asia has created a void in its former European markets.

The stabilization of oil prices, which have fallen back from their post-invasion highs, points to a market that is adapting to new realities. This modification includes integrating new sources such as Guyanese oil, which offers a growing alternative to the Russian Ural as Exxon ramps up production on the Stabroek Block, especially given its similar quality but lower sulfur content. With strong demand for light sweet crude grades, the South American country has gained a larger share of the European oil market this year. Guyana’s crude oil exports to Europe in the first half of 2023 rose to about 215,000 vbd, or 63% of the country’s total exports of 338,254 vbd, according to Refinitiv Eikon data, as reported by Reuters. Exports to Europe accounted for about 50% of last year’s shipments. For Guyana, this opportunity is not only an economic windfall, but also a strengthening of relations with Europe.

Source: https://oilnow.gy/featured/guyanas-oil-can-replace-russian-ural-sp-director/

Date: 30 December 2023

Categories:  Economic Boom, Economic News, Guyana EN, International News, Oil and Gas Industry, Suriname 

Tags:  CNOOC, Europe, ExxonMobil, Floating Production Storage and Offloading Facility, Guyana, Hess, Oil Discovery, Oil Revenues, Oil production, Olie en Gas, Richard Swann, Russian Ural, S&P Global, Sanctions 

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