New Guyana FIDs May Still Happen in a Lower Oil Price Environment

Oil production in Guyana has grown exponentially since it started in 2019, booming from an average of 75 Mb/d in 2020 to 618 Mb/d in 2024. In December 2024, production reached an all-time high of 635 Mb/d, and by the end of the decade, oil production could more than double as a total of eight projects come online. ExxonMobil still has final investment decisions (FIDs) to make on its Hammerhead and Longtail projects, which are slated to come online near the end of the decade. Recent weakness in the oil price may not delay FIDs for the two projects, as there is a history of ExxonMobil making FID on projects offshore Guyana in low oil price environments.

Current oil production in Guyana is located offshore in the Stabroek Block and ExxonMobil has made more than 34 discoveries in the block. The projects utilize floating production storage and offloading (FPSO) vessels to recover hydrocarbon resources. The first seven projects that are planned for development are liquids focused, while the eighth, Longtail, which has yet to make FID, aims to produce more than 1 Bcf/d of natural gas and may lead to LNG development in the country. ExxonMobil, via its subsidiary Esso Exploration and Production, and its partners, Hess Guyana Exploration and CNOOC Nexen Petroleum, are the sole producers in the country and currently operate three projects offshore.

ExxonMobil’s first offshore project, Liza Phase 1, started in December 2019, with production guided for 120 Mb/d when the project made FID. The second project was Liza Phase 2, which started in 2020, with average production guided for 220 Mb/d. The third currently operating project is Payara, which also has production guided for 220 Mb/d and started to produce in 2023. Production for Liza Phase 1 & 2 and Payara have come in above guidance, according to IEA production data. Yellowtail, Uaru, and Whiptail have reached FID, are under construction, and will account for at least 750 Mb/d of production growth.

In its 2024 financial results presentation, ExxonMobil guided for announcing FID for the Hammerhead project in 2025. However, this guidance was provided under a different oil price environment, when Brent was $77/bbl. The recent weakness in Brent and the uncertainty on OPEC+ strategy may factor into ExxonMobil’s FID decision, but the projects’ ISDs are 4+ years out, and low pricing has not seemed to deter ExxonMobil historically from going ahead with project development in Guyana. Case in point, Brent was $46/bbl when Liza Phase 1 was announced and $41/bbl when Payara was announced.

As seen in the graphic above, Guyana remains a promising development region and could see even more upside with Hammerhead and Longtail making FID, as the projects could add a combined 390 Mb/d of liquids production and Longtail could potentially add significant volumes of natural gas as well. All in all, if the five planned projects come online, production growth would increase from 635 Mb/d in December 2024 to at least 1.7 MMb/d by 2030.

Check back in for more Energy Market Insights from BTU Analytics, a FactSet Company, as we will continue to monitor project developments and their effects on oil & natural gas production and global balances.

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