Exxon may need Guyana more than Guyana needs Exxon

Aug 13, 2020 News

– int’l investors

Seeking Alpha, a forum of international investors and financial industry experts, has published an article stating that ExxonMobil has bet so much on Guyana that the oil major may very well need Guyana more than Guyana needs ExxonMobil.
While Guyana cannot do oil exploration and production by itself, there are other oil majors it can turn to with the technological expertise and track record for the job.
But when it comes to Guyana, its offshore assets and the 2016 deal constitute the jewel in Exxon’s crown. The investor forum said that there aren’t many opportunities like Guyana on Exxon’s pipeline.
In the article, titled ‘Exxon Mobil: Doubling Down While Facing Peak Oil Demand’, it is stated that ExxonMobil intends to produce 1M barrels of oil per day by 2026 in Guyana alone, which is 25 percent of its current global production of roughly 4M barrels per day.
It also stated that Guyana is the company’s highest Internal Rate of Return (IRR) opportunity of this scale.
The company’s discoveries in the Stabroek Block are among the cheapest in the world to extract.
In addition to that, it boasts a deal with the Guyana government that has been internationally and locally condemned as so lopsided, that Global Witness stated Guyana will lose US$55B over the life of the agreement, and called for an investigation into the circumstances of the award.
The investor forum noted that ExxonMobil has two tangible short-term, upstream growth opportunities. The first is in the Permian basin, a low-risk venture that will likely press forward. The second is Guyana, but the author notes that the Guyana venture is risky.
ExxonMobil is already producing at Liza Phase One, and is powering ahead to produce at Liza Phase Two by 2022. Those two would have a peak production of 340,000 barrels per day. Exxon has been campaigning vigorously for the swift approval of the third development, Payara; attempting to sell the line that late approval would mean billions in losses for Guyana. Experts say that Guyana should not fall for that ploy.
International lawyer, Melinda Janki, for instance, has said that ExxonMobil needs Guyana to give it free oil.
The investor forum noted that all should pay keen attention to what the Government decides on Payara, as “so much of Exxon’s future is riding on this growth.”
Janki said that this is the perfect time to strike at ExxonMobil, and hold back the Payara permit.

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