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South America’s vast hydrocarbon reserves have long made the continent a critical player in the global energy market, and two countries in particular—Brazil and Venezuela—have dominated its oil narrative for decades. Their trajectories, however, could not be more different: one represents gradual institutional growth and offshore innovation, while the other embodies decline despite enormous natural wealth. Together, they offer both context and contrast for understanding the rise of Guyana’s oil ambitions today.
Venezuela was once the undisputed energy giant of South America. By the 1970s and 1980s, it had become one of the world’s leading oil exporters, leveraging reserves in the Orinoco Belt and conventional fields around Lake Maracaibo. The state-owned company Petróleos de Venezuela, S.A. (PDVSA) was for years a symbol of national pride and technical expertise, operating with efficiency that earned international respect. With proven reserves exceeding 300 billion barrels—among the largest on earth—Venezuela still holds extraordinary geological promise. Yet its industry has collapsed under the weight of political mismanagement, chronic underinvestment, and U.S. sanctions.
The country’s production levels, which once rivalled those of OPEC heavyweights like Saudi Arabia, have plummeted. In the late 1990s, Venezuela was producing more than 3 million barrels per day. Today, output hovers below 1 million barrels per day, according to most estimates. Fields lie idle, infrastructure has decayed, and many skilled workers have emigrated. PDVSA, once a globally respected operator, now struggles with corruption scandals and operational inefficiency. As a result, Venezuela has seen its share of the global oil market shrink dramatically, reducing not only export revenue but also its geopolitical influence.
Brazil, by contrast, offers a story of steady progress, fueled by deep-water innovation. For decades, the country was seen more as an oil importer than a major exporter. That perception changed in the early 2000s with the discovery of vast “pre-salt” reserves located beneath thick layers of rock and salt deep offshore in the Atlantic. These deposits, found in fields like Lula and Búzios, are technically challenging and expensive to exploit, but they transformed Brazil into a rising energy power.
Petrobras, Brazil’s state-controlled energy company, played a central role in unlocking these resources. Despite its own struggles with corruption scandals and political interference, Petrobras developed pioneering offshore drilling technology that allowed Brazil to dramatically increase output. Today, the country produces around 3.5 million barrels per day, making it South America’s largest producer and one of the top ten globally. The bulk of this production comes from the pre-salt fields, where costs have declined as operations scaled up and efficiency improved.
Unlike Venezuela, Brazil has also managed to attract significant international investment. The government opened pre-salt blocks to foreign oil companies through bidding rounds, drawing the participation of majors like ExxonMobil, Shell, and TotalEnergies. This infusion of capital and expertise has helped accelerate development and diversify risk. While Petrobras remains dominant, Brazil’s oil sector is no longer a single-company story but part of a broader mix of domestic and global players.
The contrasting fortunes of Brazil and Venezuela underline the central role of governance and institutional stability in the energy sector. Venezuela’s resource wealth has been undermined by policy decisions that alienated investors, eroded transparency, and tied the industry to political agendas. Brazil, though hardly immune to political turbulence, created regulatory frameworks that encouraged long-term investment and technological innovation. The result is that one country has seen its production collapse while the other continues to expand.
For South America as a whole, these dynamics are more than just national stories. Venezuela’s decline has reshaped oil trade flows, reducing supply to traditional customers in North America and Europe, while increasing reliance on shadow markets and barter deals with China and Iran. Brazil’s growth, meanwhile, has turned it into a reliable exporter to Asia and beyond, securing billions in revenue that support its fiscal stability.
Together, Brazil and Venezuela provide a stark contrast that defines the regional oil landscape: abundance without functioning institutions can squander opportunity, while investment in technology and regulatory openness can unlock long-term potential. This duality forms the backdrop against which Guyana now enters the stage. As the small nation develops its own offshore fields, its leaders face a fundamental question—whether Guyana will follow the path of institutional strength like Brazil, or risk the resource curse that has crippled Venezuela.
Guyana, a small nation on the northern shoulder of South America, has a complex history shaped by colonialism, migration, and cultural fusion. Once a Dutch and later a British colony, it gained independence in 1966 and became a republic in 1970. Its society reflects centuries of movement and labour, with Afro-Guyanese, Indo-Guyanese, Indigenous peoples, and smaller communities of Portuguese and Chinese descent shaping the country’s identity. Politically, Guyana has often struggled with ethnic polarisation, fragile institutions, and a limited economic base. For decades, it relied on gold, bauxite, rice, and sugar as its primary exports, while many of its citizens sought opportunities abroad.
For most of its post-independence history, Guyana was among the poorest countries in the Western Hemisphere. That narrative shifted dramatically in the past decade, as the discovery of oil offshore placed the nation at the heart of a new energy frontier. Today, the phrase “Guyana offshore oil” carries global weight. International energy companies have invested billions in developing this resource, and the country has become one of the fastest-growing economies in the world. In 2022 and 2023, Guyana posted double-digit GDP growth, outpacing even resource-rich nations in Africa and the Middle East. The World Bank has described its trajectory as unprecedented for such a small population of just over 800,000 people.
The economic boom is transforming Guyana’s landscape. New office towers rise in Georgetown, the capital, while hotels, ports, and service bases expand along the coast to accommodate the influx of foreign companies. Roads are being widened, bridges replaced, and digital infrastructure upgraded, as the government tries to modernise a country where basic services have often lagged. Inflationary pressures and shortages of skilled labour reflect the strain of rapid change, yet the broader picture is one of surging optimism.
Oil revenues have begun to flow into a sovereign wealth fund managed under rules designed to ensure transparency and long-term stability. The government, led by the People’s Progressive Party/Civic, has pledged to use the windfall to finance schools, hospitals, renewable energy projects, and coastal defences in a country highly vulnerable to rising sea levels. Still, questions linger about whether institutions are strong enough to avoid the pitfalls that often accompany sudden resource wealth.
Foreign investment has been critical in scaling up Guyana’s oil sector. Major service providers in logistics, engineering, and construction have established operations in Georgetown and along the Demerara River. International banks and consultancies have followed, opening offices to support the sector. Regional partners, particularly in Trinidad and Tobago, have positioned themselves to supply expertise in refining, training, and offshore services. Even beyond the oil industry itself, the ripple effects are evident: real estate prices have soared, airlines have increased routes, and universities are expanding technical programs to meet future demand.
For Guyana, the challenge now is to translate its energy boom into sustainable development. The discoveries of oil offshore have thrust the country into a global spotlight, but whether this translates into long-term prosperity will depend on how well it manages its revenues, builds capacity, and maintains political stability. The promise is immense: if successful, Guyana could move within a generation from economic periphery to one of South America’s most dynamic economies. Yet the cautionary tales of its neighbours remind observers that resource wealth can be both a blessing and a curse.
The discovery of Guyana offshore oil has been largely centred on the vast Stabroek Block, a petroleum licence area of about 26,800 square kilometres. ExxonMobil (through its affiliate ExxonMobil Guyana Limited) operates this block with a 45 per cent stake. The other two partners are Hess Corporation (which has recently been acquired by Chevron), holding 30 per cent, and China National Offshore Oil Corporation (CNOOC), with 25 per cent. (1)
ExxonMobil first struck oil with the Liza-1 well in 2015. That well revealed more than 90 metres of high-quality sandstone reservoirs, some 200 kilometres off the coast. (2) Since then, over 30 discoveries have been made in the Stabroek Block alone. (3)
Production has already begun on several projects. The first, Liza Phase 1, came onstream in December 2019. Subsequent projects include Liza Phase 2, Payara, and, more recently, Prosperity. These are served by floating production, storage, and offloading (FPSO) vessels. The vessels in operation include Liza Destiny, Liza Unity, and Prosperity. (4)
One of the most recent additions is the Yellowtail development, the fourth major FPSO in the Stabroek Block, which came online somewhat ahead of schedule. Yellowtail is one of the largest vessels in the suite, with a large storage capacity (up to two million barrels) and will contribute significantly to the country’s output. (5) Together with the existing FPSOs, these platforms are helping push production upward. Current daily output is somewhere above 600,000 barrels per day, with ambitions to reach around 1.3 million barrels per day by the end of 2027, as later projects like Yellowtail, Whiptail, Uaru, and others are brought into production. (6)
Regarding estimated resource volumes, the Stabroek Block is believed to hold approximately 11 billion barrels of oil equivalent in discovered resources. Some independent analysts suggest that when including recent discoveries outside Stabroek, total recoverable resources for Guyana may exceed 13 billion barrels of oil equivalent. One upcoming project, called Uaru-Mako, is expected to add about 1.3 billion barrels to that tally when it goes online. (7)
The value of these resources is striking. Early in the discovery phase, the Liza-1 well alone was estimated to encompass something like 700 million barrels of oil, with a value at the time of around US$40 billion under then-prevailing market prices. More broadly, having more than 11 billion barrels of recoverable resources places Guyana among the top oil discovery stories of the past decade. Firms and governments view this as generating tens if not hundreds of billions of dollars in revenue over the life of the fields.
In sum, Guyana offshore oil is not just a prospective asset; it is already producing, backed by major global oil firms, served by large and sophisticated floating platforms, and holding resource volumes that make it a game changer among South America’s oil producers. As further developments like Whiptail and Yellowtail reach full capacity, the financial stakes and the pace of production are both expected to rise sharply.
The promise of Guyana offshore oil is colliding with a thicket of near-term and structural risks that span economics, engineering, health and safety, and hard security. Economically, the windfall is arriving faster than the state can absorb it. Local-content rules aim to channel spending to Guyanese firms and workers, but capacity is thin and compliance systems are still maturing, raising the risk of bottlenecks, cost inflation, and leakage of benefits abroad. The 2021 Local Content Act formalised targets and reporting, yet building a deep domestic supply chain and skills base will take years, not bid rounds. (8)
A second macro risk is over-reliance on oil revenue before diversification and power-sector upgrades are in place. The flagship gas-to-energy project at Wales, intended to reduce electricity costs and drive industrialisation, has fallen behind schedule and faced engineering and contractual disputes. Additionally, the offshore pipeline tie-ins led to temporary FPSO shutdowns in 2024. Prolonged delays would blunt the competitiveness gains that underpin non-oil growth and heighten fiscal volatility. (9)
Technically, Guyana’s production is concentrated on a handful of large FPSOs, so reliability is paramount. Early gas-compression failures and associated flaring on Liza exposed the fragility of critical equipment and drew regulatory pressure and permit modifications. While operators report improved compressor performance, the episode underscored that single-point failures offshore can cascade into output losses and reputational damage.
From an HSE perspective, spill liability, insurance, and emergency response remain under the spotlight (see also: EHS audit). Guyanese courts and civil society have pressed for clearer financial assurances for worst-case events and stricter oversight of environmental permits. Any serious incident would test evacuation, containment, and cross-border response protocols in a region with sensitive fisheries and coastlines. The regulatory posture is tightening, but credibility hinges on transparent enforcement and demonstrated readiness. (10)
Security risk has moved from theoretical to proximate. Venezuela’s revived claim over the Essequibo and recent maritime incursions near oil facilities have forced Georgetown to lean on diplomacy and external security partnerships. Even without open conflict, episodic naval pressure elevates insurance costs, complicates offshore logistics, and could chill investment sentiment; a drawn-out legal track at the ICJ means uncertainty will persist. (11)
These challenges intersect. If gas-to-energy delays extend, non-oil inflation and public frustration could climb just as local-content delivery is being judged, while geopolitical jitters raise operating costs and contingency demands. Conversely, steady reliability on the FPSOs (read more about FPSO safety), visible HSE discipline, and timely commissioning of power infrastructure would compound the gains from Guyana offshore oil, buying policy space to deepen institutions and broaden the economy before prices or politics turn. The trajectory from here depends less on geology than on execution under pressure.
Guyana’s offshore production averaged about 631,000 barrels per day in Q1 2025 and rose further with the start-up of a fourth floating production vessel in August 2025. With additional projects ramping up, capacity is widely expected to be roughly 0.9–0.95 million b/d by late 2025 and about 1.3 million b/d by 2027. Government and industry outlooks also point to the potential for ~1.7 million b/d by 2030 if sanctioned projects proceed on schedule. This surge has made Guyana offshore oil one of the largest new sources of non-OPEC supply growth this decade. (12)
Production is concentrated in the Stabroek Block, operated by ExxonMobil (45%) with partners Hess (30%)—now being acquired by Chevron—and CNOOC (25%). Output to date comes from FPSO vessels including Liza Destiny, Liza Unity and Prosperity, with the “One Guyana” FPSO added in 2025 to develop Yellowtail and Redtail. The consortium has returned some acreage under contract terms but retained all discovered areas. The Stabroek discoveries are frequently cited at more than 11 billion barrels of oil equivalent, underscoring why majors have doubled down on the basin. (13)
Under the production-sharing agreement for Stabroek, up to 75% of output can be taken as “cost oil” to recover expenses each period; the remaining “profit oil” is split 50/50 between the state and the consortium, with a 2% royalty also payable to the government. Officials reported that by early 2025, the consortium had recovered about $33.9 billion of $41.1 billion in costs. The state’s take flows to the Natural Resource Fund and from crude liftings and royalties; reported inflows in 2024 were on the order of several billion U.S. dollars. These mechanics mean Guyana offshore oil revenues scale rapidly as capital recovery is achieved and new projects come online. (14)
Guyana’s offshore assets sit at the intersection of operational reliability, HSE discipline, and geopolitical risk. The takeaway: prevent single-point failures on FPSOs via redundancy, rigorous maintenance, and gas management; harden spill response and insurance; secure maritime domain against incursions through layered surveillance, patrols, and clear protocols with partners; expedite gas-to-energy to reduce flaring and public risk; and institutionalise transparent oversight. For Guyana offshore oil, sustained value hinges on visible safety performance and credible deterrence—without them, costs, premiums, and political risk will erode the boom’s upside.
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A barrel in the oil industry is a volume unit equal to 42 U.S. gallons (about 159 liters). It is used to quote production, reserves, and prices, abbreviated bbl. In measurement practice, a “standard barrel” refers to volume at reference conditions of 60°F and 14.696 psi, because liquid oils expand or contract with temperature and pressure. Gas volumes are not measured in barrels; companies use BOE to aggregate oil and gas on an energy-equivalent basis. (15)
References:
(1) https://en.wikipedia.org/wiki/Petroleum_industry_in_Guyana
(2) https://corporate.exxonmobil.com/locations/guyana/operations/guyana-project-overview
(4) https://www.eia.gov/todayinenergy/detail.php?id=62103
(6) https://www.eia.gov/todayinenergy/detail.php?id=62103
(8) https://petroleum.gov.gy/local-content?page=1&tid=All
(9) https://www.stabroeknews.com/2025/08/30/news/guyana/gas-to-energy-project-still-far-from-completion
(10) https://drilled.media/news/oilcolonialism-01
(12) https://www.reuters.com/business/energy/guyanas-q1-oil-output-rises-3-yryr-631000-bpd-2025-04-24/
(15) American Petroleum Institute (API), Manual of Petroleum Measurement Standards (MPMS), Chapter 11.1: Temperature and Pressure Volume Correction Factors (latest edition).
Note: This article was partly created with the assistance of artificial intelligence to support drafting.