The Cooperative Republic of Guyana — a country of approximately 800,000 people on the northern coast of South America — was a non-producer of oil as recently as 2019. By the mid-2020s, Guyana produced over 600,000 barrels per day from offshore developments, with growth trajectories projecting production toward 1.0 to 1.3 million barrels per day by 2027 and potentially substantially higher beyond. This is one of the fastest production ramps in the history of the oil industry, transforming Guyana from a marginal non-producer into one of the most consequential new sources of non-OPEC crude supply globally.
The Guyana story is dominated by a single offshore block — the Stabroek block, operated by ExxonMobil — and a small number of giant discoveries within it. Understanding Guyana's oil situation requires understanding the geology of the Liza-area discoveries, the consortium structure, the FPSO-based production model, the Venezuela-related border dispute that hangs over the offshore acreage, and the implications of the recently completed Chevron acquisition of Hess.
The Stabroek Block
The Stabroek block is a 6.6 million-acre offshore concession located approximately 200 kilometers off the Guyanese coast in water depths of 1,500 to 3,000 meters. The block was awarded in 1999 and has been operated since by ExxonMobil's affiliate Esso Exploration and Production Guyana Limited.
Exploration of the block was a long, expensive, and initially unsuccessful effort. Multiple wells were drilled across nearly two decades without commercial success. The first commercial discovery — Liza-1 — was announced in May 2015 and confirmed the existence of a substantial light sweet crude resource. Subsequent appraisal and exploration drilling produced an extraordinary string of additional discoveries: Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora, Longtail, Hammerhead, Pluma, Tilapia, Haimara, Yellowtail, Tripletail, Mako, Uaru, Whiptail, and many others.
The cumulative discovered resource within the Stabroek block now exceeds 11 billion barrels of recoverable oil equivalent, making it one of the largest oil discoveries of the 21st century. Geological characterization suggests substantial further upside as appraisal continues.
Stabroek crude is high quality — light (approximately 32° API for Liza grade) and sweet (low sulfur). The crude integrates well into a wide range of global refining configurations and has found strong demand among European, U.S., and Asian buyers.
The Consortium Structure
The Stabroek block is held by a three-company consortium:
- ExxonMobil (45% operator interest) — Leads all field development and operational decisions.
- Hess Corporation (30% non-operator interest) — A New York-listed independent that has been one of the primary commercial beneficiaries of the Stabroek discoveries.
- CNOOC (25% non-operator interest) — The Chinese state offshore oil company, which acquired the original Nexen position through its 2013 Nexen acquisition.
The Chevron-Hess acquisition announced in October 2023 triggered a major arbitration dispute when ExxonMobil and CNOOC asserted right-of-first-refusal claims over Hess's Stabroek stake. The arbitration delayed completion of the Chevron-Hess deal substantially, with the merger finally completing in 2025 after the arbitration tribunal ruled in Chevron's favor. The dispute illustrated how high-value upstream assets like Stabroek shape corporate-level M&A through their underlying joint venture structures.
The FPSO Development Program
Stabroek development follows the FPSO model: each major field area is developed through a dedicated Floating Production, Storage and Offloading vessel anchored above the producing reservoir, with subsea wells tied back to the vessel for processing and storage. The FPSO program has been executed at a pace and scale that is unprecedented for a single offshore province:
- Liza Destiny FPSO — First production December 2019. Capacity 120,000-140,000 barrels per day.
- Liza Unity FPSO — First production February 2022. Capacity 220,000 barrels per day.
- Prosperity FPSO (Payara) — First production November 2023. Capacity 220,000 barrels per day.
- One Guyana FPSO (Yellowtail) — Targeting first production in the mid-2020s. Capacity 250,000 barrels per day.
- Errea Wittu FPSO (Uaru) — Targeting first production later in the 2020s. Capacity 250,000 barrels per day.
- Whiptail FPSO — In development with similar capacity.
- Additional projects — Multiple further FPSOs are in planning or pre-FID stages, with the operator targeting more than ten producing FPSOs by 2030.
Each new FPSO commissioning adds substantial production capacity within months of startup. The pace of project execution — from discovery to first oil in around four years for the original Liza project — is exceptional by industry standards and reflects a combination of attractive geology, contracted FPSO design, supportive Guyanese regulatory environment, and ExxonMobil's project execution capability.
The Guyana Production-Sharing Agreement
The Stabroek block operates under a Production-Sharing Agreement (PSA) signed between the consortium and the Guyanese government. The PSA defines:
- Royalty — A 2% royalty on gross production, payable to the Guyanese government.
- Cost recovery — The consortium recovers exploration and development costs from production before profit oil is divided.
- Profit oil split — Remaining production is split 50/50 between the government and the consortium.
- Tax treatment — Specific tax provisions including a corporate tax mechanism applied within the PSA structure.
The original PSA terms have been controversial in Guyanese political debate, with critics arguing the country gives up too much of the underlying resource value. The Guyanese government has signaled that future blocks will be licensed under modified terms with higher state take. The Stabroek PSA itself remains in force under its original terms, given the sanctity of contract provisions that international oil companies require to support multi-decade investments.
Guyana has established a Natural Resource Fund (NRF) to manage the oil revenue, with deposit rules and drawdown limits designed to prevent the kind of fiscal mismanagement that has affected other small oil-rich economies.
The Venezuela Border Dispute
The single most significant geopolitical risk hanging over Guyanese oil is the long-running territorial dispute with Venezuela. Venezuela claims sovereignty over approximately two-thirds of Guyana's territory — the Essequibo region — based on Venezuelan rejection of an 1899 arbitration award that established the current border. Crucially for the oil industry, Venezuela's claim extends to the offshore waters where most Stabroek production occurs.
The dispute has long been quiescent but has intensified periodically. Recent significant developments include:
- 2023-2024 Venezuelan referendum. The Maduro government held a referendum that formally claimed Essequibo as Venezuelan territory and authorized creation of a Venezuelan state covering the claimed area.
- Military posturing. Venezuelan military activity near the disputed border has periodically alarmed the Guyanese government and prompted international responses, including U.S. military exercises and U.K. Royal Navy deployments.
- International Court of Justice proceedings. The ICJ is hearing Guyana's case seeking confirmation of the existing border. Venezuela has rejected ICJ jurisdiction over the dispute.
- Operational impact. Stabroek operations have proceeded without disruption to date, but the territorial dispute represents a real long-term geopolitical risk to the Guyanese production trajectory.
Other Guyanese Acreage
Beyond Stabroek, Guyana has licensed additional offshore blocks to various operators:
- Canje block — Held by ExxonMobil (operator) with Total and JHI Associates as partners. Exploration drilling has been conducted with mixed results.
- Kaieteur block — Initially held by ExxonMobil; subsequent drilling did not match Stabroek's success.
- Various other blocks — Held by Tullow, TotalEnergies, CGX Energy, and others, with mixed exploration outcomes.
- 2022-2023 licensing round — The Guyanese government conducted a new round under updated PSA terms, awarding blocks to ExxonMobil, TotalEnergies, Hess (now Chevron), Sispro, and others.
The strong concentration of Guyanese production in the Stabroek block is unusual for a major producing country and creates concentration risk that the Guyanese government has sought to mitigate through diversified licensing.
What Drives Guyanese Oil Output
FPSO commissioning schedules. The single most important driver of near-term production growth.
Stabroek FID decisions. Each new project requires final investment decision; the pace of FIDs determines medium-term growth.
Operator capital allocation. ExxonMobil and consortium partner investment decisions across competing global opportunities.
Venezuela situation. Any escalation in the territorial dispute could affect operations.
Guyanese regulatory environment. Stability of PSA terms and licensing framework.
Global oil prices. Project economics support development at a wide range of price levels but extreme price weakness could affect FID timing for marginal projects.
Guyana Oil in One Sentence
Guyana is the fastest production ramp in modern oil history — a country that went from no production to over 600,000 barrels per day in five years through the ExxonMobil-Hess-CNOOC development of the offshore Stabroek block, with continued growth trajectory toward 1+ million barrels per day and a Venezuelan territorial dispute as the principal long-term geopolitical overhang.
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