U.S. Oil Majors Target African and Caribbean Oil Reserves

In a bid to tap new oil regions and produce “low-carbon oil”, several U.S. oil majors are investing heavily in African and the Caribbean oil reserves to improve their chances of enhancing their oil production longevity. Many existing oil fields in conventional oil regions of the world are running out of crude, making reserves harder and more energy-intensive to tap. This has encouraged many oil majors to pursue projects in non-conventional oil regions, such as some recently discovered oil zones in Africa and the Caribbean. Developing these sites could help energy firms maintain their crude output for decades to come, as well as reduce the carbon emissions associated with oil extraction in line with government pressure to decarbonize. 

African Oil Boom

Several African states, such as Nigeria and Angola, have long been known for their vast oil reserves. However, other countries were unheard of in the oil industry until recently when international oil companies invested in greater exploration to discover several untapped oil reserves across the continent. Namibia, Kenya, Uganda, Mauritania, Senegal, and Mozambique are just some of the African states aiming to commence operations at new oil fields within the next decade. 

Between 2015 and 2022, the U.S. government invested over $9 billion in oil and gas projects in Africa. In fact, around two-thirds of U.S. fossil fuel investment in the global market during this time went to projects in Africa. Public and private energy investments to Africa from states in the G20 and multilateral development banks between 2012 and 2021 totaled $345.76 billion, with the bulk of funding contributing to gas/liquefied natural gas (LNG), mixed fossil fuels, and solar energy sources. 

Recent oil discoveries in Namibia are some of the biggest seen this century, making it highly attractive for further exploration. James Parr, the vice president for new ventures, exploration and development at the Australian firm Woodside Energy, stated, “It is one of the newest and most attractive areas being explored by the industry and we are very excited by the discoveries so far.” The U.S. oil major Chevron has plans to commence exploration operations in Namibia this year and Exxon hopes to join the hunt in 2025. 

While several U.S. companies are financing new fossil fuel projects in Africa, the main investors come from Europe and China, with energy firms such as TotalEnergies and the China National Offshore Oil Corporation (CNOOC) playing a major role in getting new oil projects off the ground across the continent. 

The Rise of Caribbean Oil

U.S. energy firms have had a stronger hand in new Caribbean oil operations, as several new oil fields are developed in Guyana and surrounding states. ExxonMobil has been the biggest investor in Guyana, the small island state with great promise. In 2015, Exxon discovered 11 billion barrels of proven oil reserves in Guyana’s waters, with a value of over half a trillion dollars. Following the rapid development of its reserves, Guyana has started producing oil, with an anticipated output of 1.2 million barrels per day (bpd) by 2028, which would contribute around 1.1% of the global supply. 

In 2023, Guyana’s Environmental Protection Agency (EPA) approved the drilling of 35 new offshore exploration and appraisal wells by an Exxon Mobil-led consortium – consisting of U.S. oil company Hess (now part of Chevron) and China’s CNOOC. The development of several new projects is expected to support a rise in oil production to as much as 1.7 million bpd by 2035, which could make it the fourth-biggest oil producer in the world. 

The development of oil operations in the Caribbean has allowed companies, such as Chevron, to shift away from previous operations in oil-rich Venezuela to new, promising oil regions. Following the introduction of sanctions on Venezuelan oil in 2019, several oil companies sought out alternative oil reserves in the region, and Guyana has delivered. 

Guyana’s neighbor Suriname is also looking to develop its oil sector, with investment coming from TotalEnergies, Exxon, and Chevron. Experts believe the tiny nation could become South America’s newest oil-producing country. Suriname currently produces around 16,000 bpd of crude from minor offshore operations. However, with greater investment from foreign companies, this figure could rise to around 200,000 bpd by 2030. 

Suriname’s offshore Block 58 is adjacent to Exxon’s prolific Stabroek Block in offshore Guyana, which gives explorers hope that it will also hold massive oil reserves. In 2020, the investment bank Morgan Stanley calculated that Block 58 could hold as much as 6.5 billion barrels of oil, providing great optimism around the potential exploitation of Suriname’s oil. 

The development of new oil operations in Africa and the Caribbean has provided U.S. oil majors with the opportunity to tap into massive new reserves that require less energy to access and will likely support their crude production for decades to come. This has also allowed companies such as ExxonMobil and Chevron to move away from aging oil fields and contentious oil zones, in favor of more promising oil regions, with far greater investment expected to be announced in Africa and the Caribbean in the coming years.

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