Renegotiation still possible...Guyana/Venezuela territorial issue not as big as being portrayed - Industry Experts

Renegotiation still possible…Guyana/Venezuela territorial issue not as big as being portrayed – Industry Experts

May 25, 2019 News

By Kiana Wilburg

Guyana’s territorial controversy with Venezuela is often proffered by some members of Government as one of the reasons why renegotiating the nation’s lopsided deal with ExxonMobil is not up for discussion.
It is also used to excuse the overly generous fiscal terms given to the contractor.
However, University of Houston Instructor , Tim Mitro, told Kaieteur News that while the government’s position has some validity, the territorial controversy is not as big an issue as it is being made out to be so as to avoid renegotiation altogether.
In fact, Mitro who has worked for over 30 years with Chevron and Gulf Oil said that ExxonMobil is familiar with working in states involved in territorial controversy.
Sharing his experience in the sector with these matters too, Mitro said, “In several places I have worked and lived like Nigeria and Angola, they had major border disputes …They even had less treaty history like what Guyana has with Venezuela and they found ways to resolve them.”
The Co-Director of the Graduate Certificate in Global Energy, Development and Sustainability at the University of Houston added, “Sometimes, they had to grant a portion of reserves to whoever is on the other side but at the end of the day, Exxon is experienced in dealing in environments like this…
“It does put some disadvantage but to me, that does not affect calling for terms that benefit both parties…The issue is not as large as it is being portrayed to be by some.”
Further to this, the official sought to entertain a worst case scenario.
The Industry Expert said, “Let’s say the government had to give up about 20 percent of the reserves to Venezuela. That is in an extreme case. So instead of 5.5b barrels of oil equivalent reserves, it would end up being let’s say 3.2B.
That will still be more attractive than anything else ExxonMobil has. So even if they had to give up a fourth of the reserve that would still be an excellent, world class, proven reserve.”
Considering the worst case scenario, Mitro said that Exxon would have a very attractive project on its hand and renegotiation can still be considered. He said this example proves that the dispute is not such a huge factor.
Mitro also sought to reiterate that ExxonMobil is used to dealing with political and territorial risk and it is many times greater than what they face in Guyana.

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