The grand emergence of Guyana and Suriname in sweet crude oil production

The recent oil discoveries and developments in Guyana and Suriname are poised to significantly impact international trade flows of oil in the coming years. These South American nations, previously minor players in the global oil market, are now emerging as important contributors to the world's oil supply.

Guyana's Rapid Rise

Guyana has experienced a meteoric rise in oil production since 2019. As of early 2024, the country's crude oil production reached 645,000 barrels per day (b/d), all from the Stabroek block[1]. This rapid growth has made Guyana the third-fastest growing non-OPEC producing country from 2020 to 2023, with an annual average increase of 98,000 b/d[1]. The country's production is expected to reach approximately 1.3 million b/d by the end of 2027, which would make Guyana the second-largest crude oil producer in Central and South America, behind only Brazil[1].

This surge in production is already altering trade flows. In the first half of 2023, 63% of Guyana's crude exports went to Europe[2]. This shift is particularly significant as European nations seek to diversify their oil sources away from Russian supplies. Guyana's light, sweet crude is highly desirable and could potentially displace some heavier crudes in the global market.

Suriname's Emerging Potential

Neighboring Suriname is following a similar trajectory, albeit at an earlier stage. The recent announcement of a USD 9 billion oil and gas project by TotalEnergies signals Suriname's potential to become another significant oil exporter in the region[2]. While production has not yet begun, the country's prospects are promising, with the first production target set for 2028[2].

Suriname's entry into the oil export market could further augment the region's importance in global oil trade. Like Guyana, Suriname is likely to find a ready market in Europe, potentially altering established trade routes and partnerships[2].

Regional Cooperation and Infrastructure Development

The emergence of these two new oil producers in close proximity creates opportunities for regional cooperation that could enhance their impact on global trade flows. Guyana and Suriname are exploring possibilities for shared infrastructure and joint natural gas development[3]. This collaboration could lead to more efficient production and export capabilities, potentially increasing their combined influence on international oil markets.

Global Market Implications

The rise of Guyana and Suriname as oil exporters is likely to have several effects on global oil trade:

1. Diversification of Supply: As these countries increase production, they offer new options for oil importers, potentially reducing dependence on traditional suppliers.

2. Price Dynamics: The introduction of significant new supplies of light, sweet crude could influence global oil pricing, especially for similar grades.

3. Geopolitical Shifts: The emergence of new oil exporters in South America may alter geopolitical dynamics, particularly in relation to other oil-producing nations in the region.

4. Shipping Routes: Increased exports from Guyana and Suriname could lead to changes in shipping patterns, potentially increasing traffic through Caribbean and Atlantic routes.

Challenges and Considerations

While the potential for Guyana and Suriname to impact global oil trade is significant, several factors could influence the extent of their impact:

- Infrastructure Development: Both countries need to develop robust infrastructure to fully capitalize on their oil resources[4].

- Economic Management: Avoiding the "resource curse" and effectively managing oil revenues will be crucial for sustainable growth and continued production[5].

- Environmental Concerns: Balancing oil production with environmental commitments could affect production levels and international perceptions.

- Geopolitical Tensions: Territorial disputes, such as Venezuela's claim over the Essequibo region, could potentially disrupt production and trade[1].

The emergence of Guyana and Suriname as significant oil producers is set to reshape international oil trade flows. Their strategic location, the quality of their crude, and the timing of their entry into the market during a period of global energy transition make them particularly influential. As these countries continue to develop their oil sectors, their impact on global oil trade is likely to grow, potentially altering long-established patterns of energy commerce.

Citations:

[1] https://www.eia.gov/todayinenergy/detail.php?id=62103

[2] https://globalamericans.org/suriname-energy-transition-and-climate-change/

[3] https://guyanachronicle.com/2024/10/04/guyana-eyes-gas-exploration-shared-infrastructure-with-suriname/

[4] https://www.fdiintelligence.com/content/feature/surinames-oildriven-development-dilemma-82769

[5] https://en.unav.edu/web/global-affairs/guyana-del-boom-petrolero-al-riesgo-de-la-maldicion-de-los-recursos

[6] https://www.elibrary.imf.org/view/journals/002/2023/379/article-A001-en.xml

[7] https://www.worldoil.com/magazine/2021/may-2021/features/guyana-suriname-basin-rise-from-obscurity-to-super-potential

[8] https://www.fdiintelligence.com/content/feature/guyanas-struggle-to-manage-its-oil-and-gas-fdi-bonanza-81989

[9] https://www.imf.org/-/media/Files/Publications/WP/2022/English/wpiea2022224-print-pdf.ashx

[10] https://globalamericans.org/oil-water-and-climate-change-in-the-guyana-suriname-basin/