Exxon abandons West African oil venture for Guyana, other lucrative projects in Americas

Dec 02, 2022 News

Kaieteur News – With the world’s largest oil discovery in the last decade, Guyana is among top petrostates where ExxonMobil will be redirecting its energies as it abandons its West African venture in Equatorial Guinea, as part of a wider move to phase out African crude for more lucrative projects in the Americas.

An exclusive report by international news agency Reuters revealed that the company will be shifting its attention to Guyana and other markets in a bid to rid itself of high cost and environmental issues associated with the region. It was noted that the African location, “…is a high-cost region where carbon emissions are a problem as well”, so Exxon will be looking to take its business elsewhere when its license to operate in that nation ends in 2026.

“The departure reflects a wider move by major oil producers to reduce crude production in West Africa and shift investments to lower-carbon natural gas development on the continent, and to more lucrative projects in the Americas.” Exxon’s oil output in Equatorial Guinea, a member of the Organization of the Petroleum Exporting Countries (OPEC), was said to have peaked at more than 300,000 bpd eight years ago and has been declining since. Exxon is said to have been trying to sell its operation since 2020.Reuters said that the African continent itself has been struggling to meet OPEC quotas due to the lack of investments in crude production. Output from top two producers, OPEC-members Angola and Nigeria, sank by a third to 2.1 million bpd in October from 3.2 million bpd in 2019 and has been declined since 2013, by 41percent. Nigeria’s output is said to be at 32-year low and foreign oil producers such Chevron Corp (CVX.N), Shell Plc (SHEL.L) and Exxon have been retreating from that Nigeria due to rampant levels of oil theft, selling their assets mostly to local companies.

It was noted however that as crude output in West Africa shrinks, “production in the Americas is expected to grow to 28 million bpd next year, up 2.3 million bpd from pre-pandemic levels, OPEC estimates show. Much of the increase comes from the United States, Canada, Guyana and Brazil, some of the places where Exxon has increased spending on oil output.” Reuters said that Exxon has decided to decommission its Zafiro field and tow the platform away, a spokesperson confirmed.

Guyana has become a sweet spot for industry players with operators such as Hess and others urging investors to tap into the Guyana oil boom. Guyana continues to be the location for most exciting oil finds especially as Stabroek Block operators are gearing for an increase in Guyana’s proven oil wealth.

Most recent utterances to investors by Chief Executive Officer (CEO) of Hess Corporation, John Hess is that they should brace themselves for a ‘major upgrade’ to the 11 billion barrels of oil equivalent resources discovered at the Stabroek Block. During a recent engagement, Bank of America Securities Global Energy Conference, Hess said that ExxonMobil’s affiliate and operator, Esso Exploration and Production Guyana Limited (EEPGL), marked nine significant discoveries for 2022 alone. They are namely Fangtooth-1, Lau Lau-1, Barreleye-1, Patwa-1, Lukanani-1, Seabob-1, Kiru-Kiru-1, Sailfin-1 and Yarrow-1 wells, all of which are yet to be appraised for the number of barrels they hold and their estimated value.

Hess, whose company has 30 percent stake in the 6-million-acre Stabroek Block said that its resource has been growing in Guyana. “In fact, it moved from one billion barrels of oil equivalent to 11 billion. The nine discoveries this year are not in that resource base estimate so there will be a major upgrade to that number,” he said. The Hess company has been very frank about the key role Guyana’s oil resources has been playing in stabilizing the company. Earlier in the year, Hess said that it too would be allocating significant resources to Guyana as it focuses on “the low cost, high value resources” coming out of the country.