Guyana’s government should consider hedging its oil production against the falling oil prices as its booming oil revenues are set to decline with the slump in oil prices, former Guyanese Minister of Finance, Winston Jordan, told Stabroek News in an interview published on Monday.
Oil prices have slumped since early April as U.S. President Donald Trump threatened tariffs on the rest of the world and slapped triple-digit tariffs on China, while OPEC+ is accelerating its production increase by triple volumes in each of May and June compared to earlier guidance.
Amid falling oil prices, the biggest oil-producing nations, which now include Guyana with more than 650,000 bpd output from Exxon-led offshore projects, are facing declining budget revenues from oil.
In Guyana, oil production and exports, which began in 2019, have led to a booming economy, which has been showing double-digit growth in GDP over the past few years.
However, the government now needs to be more prepared to weather periods of lower oil prices, according to the former finance minister Jordan.
“The more FPSOs [Floating Production and Storage and Offloading vessels] ExxonMobil brings on, it is with these additional costs,” Jordan told Stabroek News.
“And if you are now extracting more and more oil and at a less and less price, it will take longer to pay back Exxon’s [operational] costs,” Jordan said.
“And in that, our dream of getting a better profit share will be like what Bob Marley said, ‘a fleeting illusion.’”
Guyana already produces more than 660,000 bpd of crude from the Exxon-operated Stabroek block.
Production capacity in Guyana is expected to surpass 1.7 million barrels per day, with gross production growing to 1.3 million barrels per day by 2030, Exxon says. Guyana is now the third-largest per-capita oil producer in the world, according to the U.S. supermajor.
Surging oil production and exports helped Guyana’s economy grow by 43.6% last year, marking the fifth straight year of double-digit GDP growth, which began just as Guyana became an oil producer.
By Charles Kennedy for Oilprice.com
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