Comparing the fiscal regimes of other offshore leaders, Guyana’s is on the higher end, with the government take clocking in at 59% of total value. In contrast, applying the US fiscal regime to the Stabroek block would result in a government take of only 40%. Nigeria and Brazil align more with Guyana’s fiscal policies, with 58% and 61%, respectively.
The cost of supply is a significant factor in considering the desirability of assets and comparing them to other sources and regions. Helping to transform Guyana into a global heavyweight in offshore production is its competitive breakeven costs, which average $28 per barrel across all projects and less than $20 for producing projects. Guyana’s offshore oil fields are some of the most competitive supply sources outside of the Middle East and offshore Norway and are cheaper than the US onshore heavyweight the Permian, Russia and many other sources.
In addition, emissions intensity from offshore activity in Guyana is lower than the global average for oil and gas production and deepwater offshore production, further strengthening the country’s position through the energy transition. Upstream emissions from Guyana’s deepwater activities average 9 kilograms of CO2 per boe, comparable to Brazil and slightly higher than Norway.
Although tensions with neighboring Venezuela and Suriname have been an issue in the past, warming relations have allowed for increased drilling along the borders and boosted overall investor sentiment in Guyana.
Still, it may not be all plain sailing. Strong institutional governance, transparency and regulatory practices will be vital to unlocking the full potential of Guyana’s resource wealth for its society. Although the government has taken steps to improve governance, including establishing a sovereign wealth fund and improving fiscal policy transparency, there are still improvements to be made. For instance, the Extractives Industries Transparency Initiative (EITI), which champions strong resource management and governance practices, recently found several weaknesses in Guyana’s company reporting and tax processes. However, their EITI score will likely grow in the coming years as recent improvements take effect.
