Guyana has emerged as one of the world’s most promising areas for offshore oil exploration, following significant discoveries made by ExxonMobil of the US that have started a wave of excitement in the global industry.

However, the new-found oil wealth of Guyana has heightened tensions with its neighbour Venezuela, which is in the throes of an economic crisis caused in part by falling oil production and weak prices.

It has also created further friction between Venezuela and ExxonMobil, which have been fighting a decade-long legal battle over compensation for oil projects expropriated by the government of the late Hugo Chávez in 2007.

Since it started drilling in Guyana in 2015, Exxon has discovered an estimated 1.4bn-2bn barrels equivalent of recoverable oil and gas on its Stabroek exploration block in the deep water about 120 miles offshore.

John Hess, chief executive of Hess, the US oil group which is a junior partner of Exxon in Stabroek, told the Financial Times he saw “multibillion-barrel potential” for additional discoveries there.

However, Venezuela lays claim to the Essequibo region that covers about two-thirds of Guyana’s territory, and the waters off its coast including part of the Stabroek block. The issue is as sensitive for the Venezuelan public as the Falkland Islands/Malvinas are for Argentina, which more than 30 years ago went to war with Britain over sovereignty of those islands.

António Guterres, secretary-general of the UN, in February announced the appointment of Norwegian diplomat Dag Halvor Nylander, who was successful in brokering a peace deal in Colombia, as his personal representative to work on resolving the dispute.

With Mauritania and Senegal in west Africa, and the eastern Mediterranean, Guyana is one of the three most significant new areas for oil and gas finds in the past few years, according to Andrew Latham, vice-president of exploration research at Wood Mackenzie, the research group.

The geology of the coast of Guyana and Suriname is similar to the oil-rich area off west Africa, which was connected to South America until roughly the early Cretaceous period about 130m years ago.

“To compete with [US] shale, deep water oil has to be an exceptional resource. And it looks like that’s what this is,” Mr Latham said.

Exxon expects to take a final investment decision this year to develop its Liza discovery, starting production in 2020.

Venezuela’s legislature last week cried foul over Exxon’s plans, appealing to the Geneva Agreement of 1966 that sought to find a solution to the border dispute.

Elías Matta, a Venezuelan opposition lawmaker and deputy president of the legislature’s energy and oil committee, said it suspected that some of Exxon’s wells were located in disputed waters.

He said Guyana and Exxon should stop their exploration and drilling while the issue was resolved.

Exxon said in a statement that the Liza wells were in the eastern portion of the block, which is the section furthest from Venezuela.

The revenues from Liza alone will make a big difference to Guyana, which has a population of only about 770,000. But Mr Latham said it was also likely that more oil would be found in the region.

“When you get discoveries at this scale, it would be unusual if there were no other discoveries in the future,” he said.

Other international companies are exploring along the same stretch of coast. Repsol of Spain and Tullow Oil have exploration blocks in Guyana. In neighbouring Suriname, Tullow is drilling with its partners Statoil of Norway and Noble Energy of the US. Apache, another US company, has just started drilling an exploration well. Kosmos Energy, which has partnerships in Suriname with Chevron and Hess, has been collecting and analysing seismic survey data with a view to drilling a first well next year.

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