… keeping Venezuela at bay

AMERICAN oil company ExxonMobil has not only helped to stir the interest of foreign investors to start-up ventures here in Guyana by de-risking the nation’s basin, but it has put a halt to what could have been a fallout of Venezuela’s claim to Guyana’s territory.

Since the announcement of major oil finds in offshore Guyana, numerous companies have opted to pursue the Guyanese market. This change in dynamic is sitting very well locally as a new multi-national operating front is now characterising Guyana’s upcoming oil industry and will frankly address the concerns that surround Guyana’s potential to develop its oil industry and protect its borders.

Economist and former presidential adviser, Ramon Gaskin, noted that Exxon’s presence in Guyana’s territory is one mechanism that is keeping Venezuela at bay.
Despite some objections regarding Guyana’s agreement with Exxon, Gaskin said that the company has nonetheless provided “protection” and brought some amount of stability to the situation; especially at a time when Venezuela is facing gruelling economic and social crisis.

Gaskin explained that where several companies from various territories are operating, it serves in Guyana’s benefit to reap from its oil resources, while protecting the territory. He mentioned, for example, that Exxon which is from the US, Tullow which is British and Total which is French are among some of the international companies servicing Guyana.
Venezuela’s bold claim to Guyana’s territory, which included areas believed to be oil-rich, continued to manifest itself and was even more evident when the Venezuelan navy briefly seized a U.S.-chartered oil survey ship and its crew carrying out a seabed survey for Texas-based Anadarko in 2013.

One government official who requested anonymity explained that Venezuela’s action towards Anadarko immediately dampened Guyana’s plans as many players refused to enter the Guyanese basin, given the high risk.
The official said that the general consensus then was that a major oil company with the relevant resources and support would be needed to explore Guyana’s resources, since companies had refused to invest billions of dollars in an area that was being threatened by another country. The companies deliberately stayed away from exploring the basin and this placed Guyana in a position of “high risk”, the official said.

He continued that another serious risk that faced Guyana was whether the country indeed had oil. “No one wanted to invest in Guyana where they were faced with a Venezuelan threat and at the same time not sure whether the country was blessed with the resource.”
It was explained too that it was during routine drilling by Exxon to maintain their exploration contract with Guyana that they struck oil. “It was somewhat unintentional on the part of Exxon since originally they had chosen to drill a different well and later found oil.”

This discovery was the boost that Guyana had been waiting for. “This discovery by Exxon opened the door for others who were interested but were too scared to invest. Exxon literally gave Guyana the push that it needed.”
On the other hand, the official stated, Guyana was in a difficult position. He said that today some persons are bent on smearing the Exxon contract with Guyana as the “worst ever” but it must be remembered that Guyana’s hands were almost tied, given the original agreement with the company.

He said that the former People’s Progressive Party government had already “signed and sealed” Guyana’s fate with Exxon when it signed the initial contract with the company. He said the tax exemptions and other benefits to Exxon were already in the first contract and Exxon, “as they have mentioned before”, was under no obligation to renegotiate.
He said luckily, the new administration was able to get Exxon to reconsider and offer a better sharing arrangement.