Guyana and Suriname, two small countries on the Caribbean coast of South America, are gearing up to be major players in global natural gas markets. They are entering the playing field at an explosive moment, as natural gas is poised to take off running in national energy mixes around the world. Natural gas holds great allure as an abundant and affordable “bridge fuel” away from coal as pressure mounts to make good on climate pledges.
On a global scale, demand for liquefied natural gas (LNG) is estimated to skyrocket by more than 50% by 2040. This will be driven in large part by a trend away from coal-fired power toward natural gas in industrial sectors in China, India, and other nations in South and Southeast Asia to support those nations’ development and economic growth.
The world traded 404 million tonnes of liquefied natural gas in 2023, up from 397 million tonnes in 2022. “Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach around 625-685 million tonnes a year in 2040, according to the latest industry estimates,” stated a press release by Shell Energy published earlier this year.
Now, a new report from Wood Mackenzie, titled “Can Guyana and Suriname LNG compete against new global supply?”, suggests that as much as 12 million metric tonnes per annum (mmtpa) of that LNG could come from Guyana and Suriname within the next ten years. The Guyana-Suriname basin is estimated to hold a whopping 13 trillion cubic feet (tcf) of natural gas, the lion’s share of which is located in Guyana’s Haimara cluster and Suriname’s Block 52.
These LNG projects show high levels of economic viability. Wood Mackenzie estimates that their breakeven will be approximately US$6/mmbtu, not taking shipping and regasification costs into account. However, these developments still face some degree of uncertainty as commercial structure and fiscal terms remain undefined. Experts expect that project development in Suriname with advance more quickly than in Guyana, with first gas expected as soon as 2031.
When ExxonMobil discovered major oil reserves off the north coast of Guyana in 2015, the nation was one of the poorest in the entire Western Hemisphere. Since that crude oil began being extracted in 2019, Guyana’s economy has tripled in size, and the government is currently making historic payouts to each and every Guyanese citizen as a result. Now it seems that that could be just the beginning for Guyana and neighboring Suriname, who are poised to enjoy a natural gas demand windfall.
“Guyana and Suriname projects are firming up at an interesting time,” said Amanda Bandeira, research analyst for Wood Mackenzie specializing in Latin American Upstream Oil and Gas. “US and Qatar LNG dominance is rapidly growing, but there is a supply window in the mid-2030s coming in part from the US President Biden’s pause on approving new US LNG export projects.”
Bandeira is referring to the Biden administration’s January 26th announcement that the federal government would indefinitely pause approvals of new licenses to export LNG so that the U.S. Department of Energy could review and assess whether the nation’s considerable and rapidly expanding LNG exports are having adverse effects on domestic energy security, inflation, and the environment.
“In this environment, Guyana and Suriname can offer a new cost-competitive LNG supply source and serve as regional suppliers, holding shipping costs advantage to address Caribbean and South American demand,” Bandeira went on to say. “They are also on par with US Gulf and West Africa projects to deliver to the main demand centres in Southeast Asia.”
In addition to having great timing, Guyana and Suriname also have a geographical competitive edge. Their positioning on the Caribbean Sea allows them to ship to Asian, European, and African markets inexpensively, particularly compared to suppliers who must pay to navigate the Panama Canal, which has recently been plagued by droughts.