Matthew Smith (Oil Price)
- Guyana’s offshore Stabroek Block has unlocked around 11 billion barrels of recoverable oil, turning the small nation into one of South America’s top producers in under a decade.
- Exxon and its partners rapidly brought multiple FPSOs online, pushing output to 900,000 bpd in 2025 and aiming for 1.7 million bpd by 2030.
- Initial PSA terms were unusually favorable to Exxon, prompting Guyana to revise future contracts to secure higher royalties, taxes, and profit shares.
The tiny South American nation of Guyana, once one of the continent’s poorest countries, recently emerged as a top oil producer. After a swathe of high-quality discoveries in the offshore Stabroek Block, the government in Georgetown finds itself managing one of the world’s largest oil booms. In roughly a decade, Guyana went from its first oil discovery to South America’s third-largest oil producer with signs of further growth ahead. This delivered a massive economic dividend for the country of less than one million, which sees it now ranked among the wealthiest in South America.
Key to Guyana’s booming hydrocarbon sector is the 6.6 million offshore Stabroek Block. It is here that ExxonMobil, which is the operator holding a 45% interest along with partners Chevron and CNOOC, controlling 30% and 25% respectively, made the first oil discovery in Guyana’s territorial waters during 2015. This was followed by a swathe of major commercially viable discoveries, which were eventually estimated to collectively contain recoverable oil resources of around 11 billion barrels. The oil discovered is light and sweet with an API gravity of 31.9 degrees and 0.59% sulfur, making it desirable in a low-emission world.
Impressively in a mere four years, Guyana went from first discovery with the Liza-1 wildcat well to first oil. This is a startling development for an industry where major offshore oilfields can take a decade or more to develop and bring to production. Indeed, the consensus is it takes, on average, seven to 10 years to develop an offshore oil discovery so that commercial production can begin. This is something being witnessed in neighboring Suriname, which shares the Guyana-Suriname Basin. More complex geology delayed the development of TotalEnergies’ GranMorgu project in offshore Block 58, which lies adjacent to the Stabroek Block, where, despite the discovery being made in 2020, the operation won’t be commissioned until 2028.
The development of the Stabroek Block is continuing at a stunning rate. By August 2025, Exxon had brought its fourth project, Yellowtail, online. This saw the 250,000 barrel per day ONE GUYANA Floating Production, Storage and Offloading (FPSO) vessel come online and start pumping crude oil. During November 2025, production at Yellowtail had ramped up to full capacity. This saw Exxon announce that Guyana was now pumping 900,000 barrels per day, all from the prolific Stabroek Block. This is a significant development for the former British colony because it is now South America’s third-largest oil producer behind Brazil and Venezuela.
In fact, in a decade, Guyana has gone from not being an oil-producing nation to lifting close to one million barrels per day. This saw the country overtake Ecuador, Colombia, and Argentina to become South America’s third largest oil producer behind Brazil and Venezuela. Production volumes will continue to expand with considerable production growth ahead for the Stabroek Block. Exxon is currently developing four additional projects, which, with a combined production capacity of 940,000 barrels per day, will lift Guyana’s total output to 1.7 million barrels per day by 2030. That will make the former British colony South America’s second-largest oil producer.
Meanwhile, Chevron, a 30% partner in the Stabroek Block, which acquired the interest by purchasing independent oil company Hess, recently stated the prolific oil acreage contains more oil than the 11 billion barrels currently estimated. Exxon, aside from developing already sanctioned projects in the Stabroek Block, continues to conduct exploration and appraisal drilling in the prolific oil-bearing acreage. During June 2025, the supermajor started drilling the Hamlet-1 prospect in the southeast portion of the Stabroek Block. Exxon also commenced the Lukanani-2 appraisal well for evaluating the 2022 Lukanani-1 discovery situated southeast of the Liza facility.
The Exxon-led consortium obtained highly favourable terms from Georgetown for exploiting the Stabroek Block. These were encapsulated in a production sharing agreement (PSA), which is considered one of the most lopsided to ever be introduced in the global petroleum industry. Aside from an incredibly low royalty rate of two percent being applied only to what is called cost oil, 75% of all oil lifted is classified as cost oil, with all revenue generated returned to the consortium members. In fact, only 25% of the revenue of all petroleum produced is classified as profit oil and shared 50/50 with Georgetown.
It is easy to understand why Guyana’s government initially offered such an extremely favorable agreement to the Exxon led consortium. Prior to the Liza-1 discovery, over six decades of exploration drilling had failed to find any commercially viable petroleum reservoirs in offshore Guyana. This was despite considerable conjecture that the Guyana-Suriname Basin contained as much as 32.6 billion barrels of crude oil. Such a beneficial PSA made it attractive for global energy companies to drill in Guyana’s underexplored territorial waters, despite the risks posed by earlier poor results.
As a result of the global outcry surrounding this PSA, Georgetown revised the contracts to ensure Guyana received a far greater cut of the profits generated by the country’s vast offshore petroleum reserves. The main changes were reducing cost oil to 65% of all petroleum sold and bumping up royalties to 10%, while also introducing a corporate tax of 10%. This means no other companies can secure the beneficial terms associated with the Stabroek Block, which make it extremely profitable for Exxon and its partners. Indeed, the prolific oil acreage is estimated to possess a low average breakeven price of $30 per barrel, which is among the lowest in South America.
