Guyana with its 800,000, population and spread over an area of 215,000 sq.km, is among the least densely populated countries. A 2017 economic survey categorised over 40 per cent of its population to be living below the poverty line. Cut to 2022, it is ranked as the fastest growing economies in the world.
This dramatic transformation was made possible, by the flow of First Oil from an offshore oil well, in December 2019, into the Floating Production Storage and Offload vessel (FPSO), aptly named as Liza “Destiny “. It is on course to become one of the largest per capita oil producers in the world by 2030.
A former British colony, Guyana’s dominant economic activity was plantation which required labour from India during the colonial period. Today people of Indian origin are the single largest ethnic group forming 40 per cent of its population.
Story of persistence
The search for oil in Guyana is an amazing story of perseverance. After several unsuccessful attempts, a renewed focus on exploring deep offshore area began by major oil companies after a US Geological Survey highlighted its hydrocarbon potential in 2001.
Exxon Mobil emerged as the winner, when it announced the Liza discovery in May 2015. Liza-1 well was the first significant oil find offshore Guyana.
It encountered around 90 meters of high quality oil bearing sandstone reservoirs, by drilling a well 5 km below the sea bed.
Since then, Exxon led consortium announced 30 additional discoveries. Out of them, Ranger discovery well was drilled to a depth of 6.5 km in 2.7 km of water, to discover a carbonate reservoir demonstrating Exxon’s ultra deep water and carbonate exploration capabilities. (Incidentally the carbonate reservoir is largely under explored in India.)
The gross recoverable resource for the Starbroek Block is now estimated to be over 11 billion of oil equivalent barrels. This ranks as the largest new addition to global oil reserves in several decades. Let’s go back 20 years and look at the context of similar major oil discovery in India.
By the end of 2003, the company had drilled 13 continuous near dry wells in Barmer Basin in Rajasthan with no commercial discovery to count for. The company had spent a whopping $100 million in this exploration drilling project.
The Board sternly asked CEO Bill Gammel to shut shop and wind up in India. But Gammel trusted his instinct and that of Mike Watts, Director of Exploration, too strongly to give up. He pushed the Board to allow him to drill one more well.
Gammel and Watts had a simple Geological concept and a firm belief. ONGC had discovered oil and gas in Cambay Basin and there is ongoing oil and gas production across the border in Pakistan - therefore oil must have migrated through the Barmer basin. The big question is whether it was trapped en route in Barmer Basin or not. The 14th well proved it did.
That discovery of oil in Barmer District of Rajasthan, became the biggest discovery of on-shore oil in the world in 2004 and the largest onshore discovery in India after several decades. The recoverable reserves from that discovery named Mangala, was estimated to be 1 billion barrels. In comparison, Guyana discovery is 10 times larger than Mangala .
The Mangala story of Cairn is being rewritten in Guyana on a much larger canvas by Exxon Mobil. Economic development triggered by Mangala discovery took the per-capita income in Barmer District to ₹1,28,000 in 2019, much above the State average of ₹70,000 and national average of ₹82,000.
From zero oil production in 2018, Guyana currently produces over 200,000 barrels per day and its Vice-President Bharat Jagdeo has said Guyana will produce 12,00,000 barrels per day by 2028.
Opportunity for India
In just five years, Guyana will join the coveted club of 20 countries that produce more than one million barrels of crude oil per day and will emerge as a major exporter of oil. This journey will involve multi-billion dollar investments in oil and gas field developments and associated infrastructure.
Major oil companies around the world are looking for a slice in that pie. Guyana’s Ministry of Natural Resources announced its first international bidding round. This boom in oil production will trigger all around economic development over the next decade. This is a great opportunity for Indian companies both in public and private sector to tap.
This opportunity is not just limited to upstream oil and gas companies, but across all sectors ranging from automobile to Unified Payment Interface services.
Guyana given its strong Indian connection will welcome Indian companies. The Confederation of Industry has a big role to play here.
The writer is Managing Director Hindustan Oil Exploration Company Ltd