Guyana, a country that currently produces no crude, could pump more than OPEC member Venezuela in five years.
While U.S. sanctions on Venezuela threaten to accelerate an already steep slide in production, neighboring Guyana’s output is poised to reach 750,000 barrels a day by 2025, according to an estimate from Exxon Mobil Corp. The oil major has partnered with Hess Corp. and China’s CNOOC Ltd. to develop one of the world’s biggest new deepwater oil discoveries off the country’s coast.
The potential gusher comes as Venezuela’s production plunges amid an economic crisis and U.S. sanctions targeting the country’s oil sector. Venezuelan output has declined almost 50 percent over the past three years, according to data compiled by Bloomberg. If sanctions compel U.S. oil companies to wind down their business in the Latin American nation, production could sink to 600,000 barrels a day, according to Rapidan Energy Group.
Even in the event of a speedy political resolution, production will probably fall to 890,000 barrels a day in 2019 due to "an extraordinarily deteriorated industry that is short on expertise and direction," said Mara Roberts Duque, a BMI Research analyst based in New York. Still, Venezuela has far more production capacity than Guyana. If the country stabilizes and repairs its oil sector, it’s unlikely that Guyana would surpass it, she said.
Meanwhile, Venezuelan President Nicolas Maduro has threatened to stymie development of the oil play, vowing to block Exxon from exploring in contested waters off Guyana. Exxon is in talks with Guyana’s government on the matter, Chief Executive Darren Woods said in an earnings call Friday.
© 2019 Bloomberg L.P