By Irina Slav - Nov 26, 2024
Guyana has become notorious for its vast offshore oil reserves, but its offshore fields contain a lot of gas too.
Earlier this year, the government of Guyana launched a tender for companies interested in developing its gas reserves.
Guyana looks to send the associated gas from the Liza 1 and 2 fields to the shore, process it and use it for power generation and exports.
In just a few short years, Guyana has become a factor to reckon with in global oil. The country is on track to hit the 1-million-bpd mark before this decade is over. It would only make sense that it would seek to capitalize on its gas reserves as well—but it’s facing challenges.
Guyana has become notorious for its vast offshore oil reserves, but there is natural gas there, too. For now, this is being injected back into the wells operated by Exxon, Hess, and CNOOC, to maintain pressure. Yet the authorities in Georgetown have plans—and these plans feature LNG.
Earlier this year, the government of Guyana launched a tender for companies interested in developing its gas reserves. It would have been easier to bet on the Exxon-led consortium again, but the authorities in Georgetown have made it clear they would like some diversification. The tender, however, ended in a somewhat odd way. Of the 17 companies that submitted proposals, Guyana’s government picked one called Fulcrum LNG—set up by a former Exxon executive just a year earlier. Now, doubts are emerging that the company is solid enough to help Guyana develop its gas reserves.
The founder of Fulcrum, Jesus Bronchalo appears to be the only person associated with the company, according to Reuters. The company’s website only has one press release; on the news of Fulcrum’s selection by Guyana as partner to Exxon to develop natural gas resources. And it was competing with much larger LNG developers with much longer track records, Reuters noted in its report on the selection back in June.
According to the Guyanese government, Fulcrum’s was “the most comprehensive and technically sound proposal.” The idea is simple enough: send the associated gas from the Liza 1 and Liza 2 fields to the shore, process it, and use it for power generation and LNG exports. The capacity of the project was set at up to 50 million cu ft daily. Interestingly, nothing has been finalized yet, Reuters reports.
“No project has been awarded to anyone. We're in an exploratory phase,” Guyana’s vice-president told the publication in October. The walkback on the initial enthusiasm appears to have coincided with criticism of the government’s pick by opposition politicians. Fulcrum LNG “lacks requisite experience and a demonstrated ability to raise the type of multi-billion-dollar finances required,” an economist and adviser to a Guyanese opposition party, the People’s National Congress, told Reuters.
Indeed, there is very little information about the company besides the fact its founder and CEO spent 20 years at Exxon before striking out on his own—after spending the three years between 2020 and 2023 in Guyana as regional executive. The company’s website has a lot of information about expertise in the oil and gas industry but with no details about specific projects.
According to skeptics who spoke to Reuters, the problem with such small companies is that they lack the means to find the financing necessary for projects of the scale that the Guyanese government wants to develop. According to the government, Fulcrum plans to get funding from the U.S. Export-Import Bank, private equity firms, and “an environmental partner.” The company has not divulged any details on the identity of these firms, only saying it would partner with Baker Hughes and McDermott on the construction work.
It is a somewhat strange situation, for sure, and it may mean that Guyana takes longer than desired to tap its natural gas reserves, which could reduce energy costs for its population and propel it to the global LNG scene in the future. Exxon is already working on the first part of the plan: it is building a gas pipeline to the shore for a 500-MW power plant that should be operational by the end of next year—but it is running behind schedule. It seems repeating its oil success with gas may be a bit of a challenge for Guyana.
By Irina Slav for Oilprice.com
India’s PM Modi Says Guyana Crude Is Key For India’s Energy Security
Indian Prime Minister Narendra Modi said Thursday during a visit to Guyana that his government views Guyana as key to India’s energy security.
Modi: we will encourage Indian companies to invest in Guyana.
India currently imports most of its crude from the Middle East and Russia.
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Two weeks ago, U.S. oil and gas giant, Exxon Mobil Corp. (NYSE:XOM) announced it had reached 500M barrels of oil produced from Guyana's offshore Stabroek block, just five years after it kicked off production at the location. According to Exxon, the first three projects--Liza Phase 1, Liza Phase 2 and Payara--are already pumping more than 650K bbl/day. The Exxon-led consortium which includes Hess Corp. (NYSE:HES) and China's Cnooc (OTCPK:CEOHF) have set a target to reach production of at least 1.3M bbl/day of oil by year-end 2027, a feat it hopes to achieve when six approved offshore projects come online.
And now one of the world’s biggest oil consumers is eyeing the light and sweet crude produced by the tiny South American country. Indian Prime Minister Narendra Modi said Thursday during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country.
Guyana did not immediately grant Modi’s wish, with India’s External Affairs Minister Jaideep Mazumdar saying talks will continue and that such a deal would ensure “greater predictability.” Guyanese Natural Resources Minister Vickram Bharrat told reporters that Guyana is willing to supply India with a large amount of crude, if Exxon Mobil, the main operator in Guyana’s offshore oil production, agrees to such an arrangement.
“We know Exxon has to do some amount of changes to their lifting schedule and logistics because their preference is for the very large vessels that can accommodate two million barrels mainly because of distance and cost,” Bharrat said.
According to Bharrat, Guyana prefers that Indian companies bid for oil blocks and negotiations can proceed once a bid is submitted.
Enhancing Energy Security
With India recently becoming the biggest buyer of discounted Russian oil ahead of China, it appears counterintuitive that it would be so eager to buy crude from a country located nearly three times farther away than its much larger neighbor. Russian crude exports to India in July reached a record 2.07 million barrels per day (bpd) compared with 1.76 million bpd to China. However, energy security has become a critical issue for India due to its surging energy demand and limited domestic resources.
Previously, we reported that India’s energy security has been severely compromised by the ongoing Middle East conflict. Whereas a lot of focus lately has been on India’s surging imports of Russian oil, the country actually buys the lion’s share of its oil from the Middle East. In August, the Middle East accounted for 44.6% of India’s crude imports, up from 40.3% in July. Iraq, Saudi Arabia, the UAE and Kuwait are the main Middle Eastern suppliers of oil to India. In contrast, the share of Russian crude fell to 36% after five straight months of increases. Meanwhile, India imports nearly half of its liquefied natural gas (LNG) from Qatar. Back in February, India's Petronet LNG (PLL) and QatarEnergy inked a long-term LNG Sale & Purchase Agreement (SPA) for the supply of around 7.5 million metric tons per annum (MMTPA) of LNG to India over the next 20 years. The deal involves LNG imports of $78 billion by the PLL during the contract period.
India’s geostrategic positioning and access to two of the world’s most critical maritime chokepoints--the Malacca and Hormuz Straits--make it a critical player in the global oil trade. Hormuz is the world's most important oil transit choke point. Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. Even temporary disruptions that occur along these critical routes can lead to substantial increases in shipping costs, increasing world energy prices. Located between Oman and Iran, Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the only maritime link to the rest of the world for Iraq, Kuwait, Bahrain, and Qatar, with their economies highly dependent on imports for basic necessities. Over 85% of India’s oil is imported via the Strait of Hormuz while key trade routes pass through the Malacca Strait. Together, these straits see over 60% of the world’s oil flow and a third of global trade, underscoring their strategic importance for not only India’s but the world’s energy security and economic continuity.
Oil prices fell more $2 per barrel on Monday after reports emerged that Israel and Lebanon have agreed to the terms of a deal to end the Israel-Hezbollah conflict. Reuters reported on Monday that a senior Israeli official said the country’s cabinet would meet on Tuesday to approve a ceasefire deal with Hezbollah, while a Lebanese official said Beirut had been told by Washington that an accord could be announced "within hours".
"It seems the news of a ceasefire between Israel and Lebanon is behind the price drop, though no supply has been disrupted due to the conflict between the two countries and the risk premium in oil has been low already before the latest price decline," said Giovanni Staunovo of UBS.
It’s possible that these developments mark the beginning of de-escalation of tensions in the region. However, U.S. officials have warned that negotiations are not complete after previous hopes for Israel-Hezbollah ceasefire were dashed. Further, the fact that Israel has dramatically ramped up its campaign of air strikes in Beirut and other parts of Lebanon just hours after news of a potential deal came out does not inspire a lot of confidence.
By Alex Kimani for Oilprice.com
Modi: we will encourage Indian companies to invest in Guyana.
India currently imports most of its crude from the Middle East and Russia.
Two weeks ago, U.S. oil and gas giant, Exxon Mobil Corp. (NYSE:XOM) announced it had reached 500M barrels of oil produced from Guyana's offshore Stabroek block, just five years after it kicked off production at the location. According to Exxon, the first three projects--Liza Phase 1, Liza Phase 2 and Payara--are already pumping more than 650K bbl/day. The Exxon-led consortium which includes Hess Corp. (NYSE:HES) and China's Cnooc (OTCPK:CEOHF) have set a target to reach production of at least 1.3M bbl/day of oil by year-end 2027, a feat it hopes to achieve when six approved offshore projects come online.
And now one of the world’s biggest oil consumers is eyeing the light and sweet crude produced by the tiny South American country. Indian Prime Minister Narendra Modi said Thursday during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country.
Guyana did not immediately grant Modi’s wish, with India’s External Affairs Minister Jaideep Mazumdar saying talks will continue and that such a deal would ensure “greater predictability.” Guyanese Natural Resources Minister Vickram Bharrat told reporters that Guyana is willing to supply India with a large amount of crude, if Exxon Mobil, the main operator in Guyana’s offshore oil production, agrees to such an arrangement.
“We know Exxon has to do some amount of changes to their lifting schedule and logistics because their preference is for the very large vessels that can accommodate two million barrels mainly because of distance and cost,” Bharrat said.
According to Bharrat, Guyana prefers that Indian companies bid for oil blocks and negotiations can proceed once a bid is submitted.
Enhancing Energy Security
With India recently becoming the biggest buyer of discounted Russian oil ahead of China, it appears counterintuitive that it would be so eager to buy crude from a country located nearly three times farther away than its much larger neighbor. Russian crude exports to India in July reached a record 2.07 million barrels per day (bpd) compared with 1.76 million bpd to China. However, energy security has become a critical issue for India due to its surging energy demand and limited domestic resources.
Previously, we reported that India’s energy security has been severely compromised by the ongoing Middle East conflict. Whereas a lot of focus lately has been on India’s surging imports of Russian oil, the country actually buys the lion’s share of its oil from the Middle East. In August, the Middle East accounted for 44.6% of India’s crude imports, up from 40.3% in July. Iraq, Saudi Arabia, the UAE and Kuwait are the main Middle Eastern suppliers of oil to India. In contrast, the share of Russian crude fell to 36% after five straight months of increases. Meanwhile, India imports nearly half of its liquefied natural gas (LNG) from Qatar. Back in February, India's Petronet LNG (PLL) and QatarEnergy inked a long-term LNG Sale & Purchase Agreement (SPA) for the supply of around 7.5 million metric tons per annum (MMTPA) of LNG to India over the next 20 years. The deal involves LNG imports of $78 billion by the PLL during the contract period.
India’s geostrategic positioning and access to two of the world’s most critical maritime chokepoints--the Malacca and Hormuz Straits--make it a critical player in the global oil trade. Hormuz is the world's most important oil transit choke point. Chokepoints are narrow channels along widely used global sea routes that are critical to global energy security. Even temporary disruptions that occur along these critical routes can lead to substantial increases in shipping costs, increasing world energy prices. Located between Oman and Iran, Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. The Strait of Hormuz is the only maritime link to the rest of the world for Iraq, Kuwait, Bahrain, and Qatar, with their economies highly dependent on imports for basic necessities. Over 85% of India’s oil is imported via the Strait of Hormuz while key trade routes pass through the Malacca Strait. Together, these straits see over 60% of the world’s oil flow and a third of global trade, underscoring their strategic importance for not only India’s but the world’s energy security and economic continuity.
Oil prices fell more $2 per barrel on Monday after reports emerged that Israel and Lebanon have agreed to the terms of a deal to end the Israel-Hezbollah conflict. Reuters reported on Monday that a senior Israeli official said the country’s cabinet would meet on Tuesday to approve a ceasefire deal with Hezbollah, while a Lebanese official said Beirut had been told by Washington that an accord could be announced "within hours".
"It seems the news of a ceasefire between Israel and Lebanon is behind the price drop, though no supply has been disrupted due to the conflict between the two countries and the risk premium in oil has been low already before the latest price decline," said Giovanni Staunovo of UBS.
It’s possible that these developments mark the beginning of de-escalation of tensions in the region. However, U.S. officials have warned that negotiations are not complete after previous hopes for Israel-Hezbollah ceasefire were dashed. Further, the fact that Israel has dramatically ramped up its campaign of air strikes in Beirut and other parts of Lebanon just hours after news of a potential deal came out does not inspire a lot of confidence.
By Alex Kimani for Oilprice.com
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