Exxon Mobil Corp. on Thursday reported its fifth new oil discovery after drilling the Turbot-1 well offshore Guyana with the Stena Carron drillship.
“The results from this latest well further illustrate the tremendous potential we see from our exploration activities offshore Guyana,” ExxonMobil Exploration Co. President Steve Greenlee said in a company announcement. “ExxonMobil, along with its partners, will continue to further evaluate opportunities on the Stabroek Block.”
According to ExxonMobil, Turbot is the latest in a string of discoveries in Guyana. Previous discoveries in the South American country include Liza, Payara, Snoek and Liza Deep. The company said that its affiliate Esso Exploration and Production Guyana Ltd. began drilling Turbot-1 on Aug. 14, 2017, and encountered a reservoir of 75 feet (23 meters) of high-quality, oil-bearing sandstone in the primary objective.
According to Wood Mackenzie, the Turbot-1 discovery “puts Guyana on the map” because the country currently produces no oil.
“ExxonMobil continues with its successful exploration campaign offshore Guyana with the discovery of Turbot,” said Pablo Medina, Wood Mackenzie’s senior analyst, Latin America Upstream. “This shows that deepwater can still be attractive. After today’s announcement, ExxonMobil’s Liza and Payara complex might approach the 2 billion barrel mark in commercial reserves.”
Wood Mackenzie expects Guyana to be one of Latin America’s top oil producers by 2026 with approximately 350,000 to 400,000 barrels per day of oil production, noted Medina.
U.N. officials are visiting the South American country of Guyana to help settle a border dispute with neighboring Venezuela.
The office of Guyana President David Granger says U.N. officials were studying the issue Tuesday and that the secretary general eventually will meet with both presidents to help find a solution.
Granger’s office says it plans to go to the International Court of Justice if the dispute continues.
Venezuela long has claimed two-thirds of Guyana as its own, including a large marine area where Exxon Mobil Corp. said it had made a significant oil discovery.
In fact, Guyana joined Petrocaribe during the PPP’s tenure and the small, relatively weak Guyanese government soon became dependent on Venezuelan oil shipments. In exchange for shipments equal to roughly half of Guyana’s daily oil consumption, Guyana sends 200,000 tons of rice every year, about 40 percent of its total rice production. But, according to Guyanese Finance Minister Winston Jordan, the Venezuelan government threatened to stop buying rice from Granger’s government by 2016. Maduro is punishing Granger for his defiance and, as a result, Guyana might have to buy oil from Venezuela at market prices using hard currency.
Maduro’s hostility is also borne of fear. In May, Guyana sent a ship from the Guyanese Defense Force to St. Kitts and Nevis to partake in military exercises hosted by the U.S. Southern Command. And with U.S. investors fleeing Venezuelan markets, Maduro wants to prevent capital flight to an English-speaking, U.S.-aligned neighbor with sudden windfall oil profits.
Maduro knows that if Guyana keeps its government from forming an oil monopoly like the ones in Saudi Arabia and Venezuela, Guyana could become a wealthy and functional society. And if the government does eventually form an oil monopoly, Guyana could become the Kuwait to Venezuela’s Iraq; Maduro would want to prevent that.
As long as Venezuela doesn’t seize Guyanese oil assets or sabotage rigs, the Stabroek block could produce more than $40 billion worth of crude oil over ten years. In that case, Guyana, the third-least prosperous country in Latin America, with the world’s highest suicide rate, has a shot at becoming more like its most realistic role model, Uruguay.
Fortunately, both leaders have stated publicly that they will seek a peaceful solution. This is good news for energy investors who prefer to deal with an English-speaking government less likely to seize assets. In fact, ExxonMobil is not the only foreign oil company placing a healthy bet on Guyana’s future.
In addition to Exxon’s Esso Exploration and Production Guyana Limited, which holds a 45 percent interest in the Stabroek drilling project, Hess’ Guyana Exploration Limited and China National Offshore Corporation’s Nexen Petroleum Guyana Limited hold 30 percent and 25 percent, respectively. Additional companies exploring Guyana’s off-shore potential include Canada’s CGX Energy and Spain’s Repsol.
The future is bright for Guyana. Multinational oil companies are investing unprecedented sums into Guyana’s offshore potential, and its new governing coalition led by President Granger has a chance at a fresh start.
But the likelihood of Venezuela invading Guyanese territory increases as the fate of Maduro’s reign worsens. In a desperate bid for domestic support, Maduro might strike out at Guyana, much like the Argentine military junta’s failed attempt to save itself by invading the Falklands Islands in 1982.
On the other hand, the likelihood of Maduro invading Guyanese territory diminishes as the coalition of international firms invested in the region grows larger and more diversified. At a certain point, the coalition across the border will be too powerful for Maduro to oppose. In this sense, the race for Guyana is on.