FPSO Prosperity working on ExxonMobil's third offshore oil development on Guyana's Stabroek block; Source: Keppel

While strengthening hydrocarbon ties, Guyana and India also pooling resources for green energy

Thanks to multiple discoveries, Guyana has quickly emerged as a global oil and gas exploration hotspot. In recognition of this, India recently greenlighted the inking of a memorandum of understanding (MoU) between its Ministry of Petroleum and Natural Gas and Guyana’s Ministry of Natural Resources to join forces in the hydrocarbon sector. The two countries will also work together to push clean and renewable energy development forward.

FPSO Prosperity working on ExxonMobil's third offshore oil development on Guyana's Stabroek block; Source: Keppel

The stamp of approval for the proposed MoU came from India’s Union Cabinet, chaired by the Asian country’s Prime Minister, Shri Narendra Modi. This MoU encompasses the complete value chain of the hydrocarbon sector, covering sourcing of crude oil from Guyana, participation of Indian companies in the South American country’s exploration and production (E&P) sector, cooperation in the areas of crude oil refining, natural gas sector, capacity building, strengthening bilateral trade, developing regulatory policy framework in Guyana’s oil and gas sector; and cooperation in the area of clean energy including biofuels as well as renewables such as solar energy etc.

With Guyana turning into the world’s newest oil producer, its wave of discoveries of 11.2 billion barrels of oil equivalent amounts to 18% of total global oil and gas discoveries and 32% of discovered oil. Within OPEC’s World Oil Outlook 2022, Guyana was projected to see a significant ramp-up in production, with liquids supply growing from 0.1 mb/d in 2021 to 0.9 mb/d in 2027.

According to BP Statistical Review of World Energy 2022, India is the world’s third-largest energy consumer, the third-largest consumer of oil, the fourth-largest refiner, and the fastest-growing major economy with rising energy needs. Both BP Energy Outlook and the International Energy Agency (IEA) estimate that India’s energy demand will grow at about 3% per annum until 2040, compared to the global rate of 1%.

Additionally, India is likely to account for around 25-28% of the global energy demand growth between 2020-2040. With this at the forefront, the country is focusing on fostering new partnerships in the hydrocarbon sector, both through diversification of crude oil sources and through acquiring quality overseas assets, to ensure energy access, availability, and affordability to citizens, underpinned by the energy security of the country. These steps also dilute dependencies on a single geographical/economic unit and increase India’s strategic maneuverability.

“The MoU on cooperation in hydrocarbon sector with Guyana will strengthen bilateral trade, foster investment in each other countries and help diversify source of crude oil, thus augmenting the energy & supply security of the country. It will also provide opportunity to Indian company to participate in E&P sector of Guyana, gaining experience by working with global oil & gas companies in upstream projects, thus fostering the vision of ‘Aatmanirbhar Bharat,’” explained India’s government.

The MoU between the duo will enter into force on the date of its signing and remain in force for five years. The cooperation agreement will be automatically renewed thereafter on a quinquennium basis unless either country gives the other a written notice three months in advance of its intention to terminate this MoU.

One of the biggest players in Guyana is ExxonMobil, which plans to have six FPSOs with a gross production capacity of more than 1.2 million barrels of oil per day online on the country’s Stabroek block by the end of 2027, with the potential for up to ten FPSOs to develop the estimated gross discovered recoverable resources of more than 11 billion barrels of oil equivalent.

The U.S. oil major began production from its third oil development at the Stabroek block on Tuesday, November 14, 2023, with the start-up of the company’s third FPSO, Prosperity, which was put into operation ahead of schedule.

In addition, the company’s Yellowtail and Uaru, the fourth and fifth projects, are in progress and will each produce approximately 250,000 barrels of oil per day. ExxonMobil is working with the government of Guyana to secure regulatory approvals for a sixth project at Whiptail.