The oil and gas industry is a complex one, with many different sectors which all come together to gather, refine and deliver energy resources. The upstream segment is perhaps the most essential aspect since it deals with the research and production phases of oil and gas. This blog will define the term upstream oil and gas, take a deeper look at Guyana’s process of “upstream” oil and gas production, as well as its implications on the country.
The oil and gas sector is divided into three main segments- upstream, midstream & downstream. Every piece of the supply chain has an important place in how oil and gas gets from the ground to its ultimate customer.
Upstream oil and gas relates to trips applied on the discovery, Going then producing crude Oil also natural Gas. Also called the exploration and production (E&P) sector. The Oil and gas value chain essentially starts from the Upstream sector where hydrocarbon reserves are actually detected.
The upstream is important, as it provides the feedstock needed for midstream and downstream. There will be no oil and gas industry without any exploration & production, end of the day these are your prime activities. The upstream is also very capital intensive and risky with investments in technology, equipment as well as huge manpower for the energy that may or may not be found.
This means that the not-so-large, northeast coast of South Africa tiny Guyana is among one of the most hopeful rising plays in global oil and gas. The recent discovery of extensive offshore oil reserves in Guyana’s waters, however, has thrust the country into the global limelight as its energy minister seeks to carve out a future for this small South American nation that is attracting some major international players — and changing one of them.
Estimates reveal Guyana kicked off oil and gas as early as the late 20th Century, some exploration activities were carried out then. Still, it wasn’t until 2015 that the country uncovered its first large oil find. The Liza field was discovered in the Stabroek Block by ExxonMobil (Operator), and Hess Corporation, CNOOC Limited.
The discovery of Liza was transformative for Guyana. Giant finds would continue to be made in the Stabroek Block, like Payara, Liza Phase 2 and Yellowtail, strengthening Guyana’s position as budding owner of considerable oil reserves. Guyana is estimated to have over 11 billion barrels of oil reserves, based on data in the year up to 2024. It is one among the largest proven such deposits that exist now.
While the process in Guyana to develop oil and gas upstream activities is comparable with that of any other hydrocarbon producing region, it presents specific challenges as well as opportunities.
The first phase in the oil production process is exploration. Exploration is an extensive process in Guyana which involves conducting seismic surveys and geological studies to identify offshore reserves. Since most of Guyana’s oil fields are in deep water, exploration activities require the use of advanced technology and significant investment. Since the discovery of the first field at Liza, the exploration activities have expanded in the Stabroek Block and beyond to discover more fields in neighboring blocks. Currently, Guyana has more than 30 noteworthy oil discoveries, with ongoing exploration activities.
Drilling is done using complex deep-water drilling rigs that can drill to depths of over 6,000 feet. The drilling process is sophisticated and involves drilling multiple wells at varying angles to maximize the recovery of hydrocarbons from the reservoirs.
Production follows drilling once all the wells are in place. Currently, the favored production method in Guyana is using floating production vessels. Floating production, storage, and offloading vessels are production facilities designed to process oil and gas extracted from the underwater reservoirs. The Liza Destiny ship and her sister FPSO Liza Unity are currently in operation. Guyana’s oil production has hit 1.2 million barrels per day since 2024. Other vessels are in production, with about six FPSO expected to come online before 2027.
The development stage involves the installation of subsea pipelines to convey the oil to the FPSOs, the construction of additional onshore infrastructure, and the expansion of the FPSO fleet. The government has also been working on ensuring the necessary regulatory and legal construct of an industry with one foot in its infancy, REUTERSGuyana. This will include the setting up of a regulatory body for upstream activities in Guyana.
Let’s talk about Guyana’s oil and gas industry and its impact. It’s growing fast, but there are worries about the environment and people living there. Activities like offshore drilling could harm sea life and an oil spill could be devastating. To combat this, international oil companies in Guyana are playing it safe. They keep a close eye on the environment, stick to safety standards, and are ready to handle any oil spills. They’re not just thinking about the environment, but people too. The oil and gas industry could help folks in Guyana by bringing in money, creating jobs, and lowering poverty. But there are obstacles, like how to split up the wealth, being clear about what’s going on, and stopping the “resource curse” that other oil countries have struggled with.
Guyana’s oil and gas discoveries have been a game-changer for the economy. Before, it was mostly about agriculture, mining, and services. But the oil and gas boom has led to a big change. By 2024, the industry made up over 60% of Guyana’s GDP. Money from oil exports rose, and the government is predicted to make over $4 billion each year. This money has been used for infrastructure, education, healthcare, and much more. And it’s not just the government that’s benefited. The industry has given jobs to thousands of Guyanese people, direct and indirect. These jobs range from drilling to engineering to logistics. And the local content policies have meant even more jobs for Guyanese citizens. On top of that, Guyana has drawn in a lot of foreign money. International oil companies have invested billions in exploring, drilling, and producing oil and gas. This money has also boosted other parts of the economy, like construction, transport, and hospitality.
The extractive sector in Guyana — particularly offshore oil exploration and production centered on Liza Phase One (LPI) that commences operation this year 2020–has the potential to offer tremendous economic benefits as well as challenges for long-term sustainability.
Oil and gas has also historically been one of the most cyclical industries, with prices driven by supply and demand in global markets. And this volatility can affect Guyana’s economy in concrete ways if the country relies so heavily on oil revenues. The government must adopt prudent fiscal measures to avoid this, including saving and investing oil revenues for future generations through a well-managed sovereign wealth fund.
Starts its journey: for Guyana, upstream activities the main worry (Bard186 — stock.adobe.com) Oil spill risks for example, loom, and offshore drilling operations can also affect marine habitats. To resolve these issues, the implementation of environmental rules and regular controls must be strengthened as well as investment in clean technologies to decrease this industry’s impact on the environment.
Guyana’s infrastructure is being stretched by the ExxonMobil-led oil boom. Infrastructure, especially investments in ports and roads as well modern energy-facilities construction are imperative for the country to enable growth of such industry. This would involve working with the government, private sector and international partners to ensure that infrastructure development for the oil industry keeps pace.
Over time, the oil and gas sector has come to be seen as a mainstay of the Guyana economy thus diversification is necessary in order to rid any dependence on another entity. There remain many opportunities —in agriculture, tourism and manufacturing among others — that can help the government work towards reducing its dependence on one sector.
It is also important to ensure that revenue flows from the oil and gas sector are distributed equitably across society. Policies must be put in place that are focused on social equity, poverty reduction and the enhancement of living standard for ALL Guyanese across board. That means investing in rigorous education, healthcare and social-service systems so the wealth….…
This bodes well for the future of upstream oil and gas in Guyana, where exploration development will continue to underpin expansion going forward. With the rights to a significant portion of its offshore proven reserves and investment terms that companies find appealing, Iraq becomes an attractive place for international oil firms.
We will all take for granted in 2024, when more FPSO vessels are added and as new fields come on stream that there is an increase in oil production. The move will enhance even further the country’s oil output while increasing revenue, solidifying Nigeria as a player in the global world market.
But whether or not the transparency initiatives will actually contribute to a successful future for Guyana’s upstream oil and gas sector might well depend on how the government manages these challenges, today. Guyana has the potential to transform its prospects by following best practices with good governance, environmental sustainability and social equity as it develops an oil and gas industry.
Also read: Supply Chain Management in the Oil and Gas Industry in Guyana
In the growth of Guyana’s oil and gas sector, firms like The GET Global Group are pivotal. As a significant force within the sector, The GET Global Group supplies a spectrum of services. These facilitate the search, drilling, production, and enhancement operations in Guyana’s oil fields.
Also Read: Occupational Hazards in Oil and Gas Industry Guyana
