By Ariana Gordon

OIL giant ExxonMobil on Thursday announced that a “world-class discovery” of between equivalent of 800 million and 1.4 billion barrels of oil following the drilling of the Liza-2 well in the Stabroek Bloc offshore Guyana. The discovery is the company’s second exploration offshore Guyana; the first was made in May 2015.
“We are excited by the results of a production test of the Liza-2 well, which confirms the presence of high-quality oil from the same high-porosity sandstone reservoirs that we saw in the Liza-1 well completed in 2015,” said Steve Greenlee, President of ExxonMobil Exploration Company.
Greenlee said the company looks forward to continuing “a strong partnership” with the Government of Guyana to further evaluate the commercial potential of the discoveries.
The Liza wells are located in the Stabroek Bloc approximately 120miles (193 kilometres) offshore Guyana. Data from the successful Liza-2 well test is being assessed. According to the release, the Liza-2 well was drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Limited, approximately two miles (3.3 km) from the Liza-1 well.
The Liza-2 well encountered more than 190 feet (58 metres) of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to 17,963 feet (5,475 metres) in 5,551 feet (1,692 metres) of water.
“This exploration success demonstrates the strength of our long-term investment approach, as well as our technology leadership in ultra, deep-water environments,” said the President of ExxonMobil.
The Stabroek block is 6.6 million acres (26,800 square kilometres). Esso Exploration and Production Guyana Limited is operator and holds 45 per cent interest in the Stabroek block. Hess Guyana Exploration Limited holds 30 per cent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 per cent interest.
FANTASTIC NEWS
Natural Resources Minister Raphael Trotman in an initial statement on Thursday following the oil company’s announcement, described the announcement as “fantastic news for Guyana,” while noting that President David Granger will soon address the nation on the oil find.
“… certainly, it is beyond expectations,” said Trotman, who added that “We have to settle down to serious business to prepare for it, so that we can manage it responsibly and have the right people in place. The way ahead is going to be defined by the President.”
ExxonMobil is currently working to assist the Government in the development of the local oil sector. The oil company, Trotman said, is partnering with the University of Guyana and other institutions in that regard.
Additionally, the Natural Resources Minister noted that the regulatory framework for the development of the natural resources sector is a work in progress, noting that Guyana is receiving assistance from the U.S., UK and Canada.
Guyana’s extractive sector “is doing well” said Trotman, who referenced the performance of the gold and diamond sectors over the past year.
RIGHT PATH
Meanwhile, outgoing Deputy Chief of Mission at the American Embassy in Georgetown, Guyana Bryan David Hunt, in a radio interview with News Sources Gordon Moseley Thursday morning said he believes that Guyana is well poised to become an oil-producing country. He said the Government of Guyana has already taken steps to prepare for a future with oil.
“I don’t think any country that has not been an oil producer is ever well prepared for the discovery of that magnitude,” said the U.S. diplomat, who referenced the second discovery of oil announced on Thursday.
He said there is a time lag from the discovery of oil to the production of the commodity, and as such, “there is still time for the Government to do the right things.”
The outgoing Deputy Chief of Mission referenced the Sovereign Wealth Fund, and discussions on the Extractive Industry Transparency Initiative, while noting that the move by the APNU+AFC-led administration to conduct forensic audits and get a handle on contractual and financial implications while identifying deficiencies in the management of State resources and the reform of procurement systems are all steps in the right direction.
He also believes that there must be “better collaboration” between the Government and the Opposition in this regard.
“I think Guyana can be ready by the time the oil is ready to come out of the ocean floor,” said Hunt who served three years in Guyana.
REVIEW OF CONTRACT
Asked to comment on the discourse between Opposition Leader Bharrat Jagdeo and Minister of Natural Resources and the Environment, Raphael Trotman, on whether the 1999 contract between ExxonMobil and the Guyana Government should be reviewed, Hunt said both parties are correct.
While admitting that he does not have enough information on the matter, he believes that the Opposition Leader’s point is valid. He said the view that “contracts between Governments and private companies should be honoured is [an] absolutely correct one.”
“The Minister of Natural Resources is also correct that there are times when with agreement of both parties it makes sense to re-look at the contracts in light of new facts,” he said, noting that a re-examination of the contract should be done collaboratively.
“I hope whatever is done is collaborative between the Government and the company, which in this case is ExxonMobil and that any changes that are made would be agreed to and beneficial to both sides,” said the outgoing Deputy Chief of Mission.
Hunt said too that the sanctity of contracts and its link to the rule of law must be upheld, as such provides confidence to investors, domestic and foreign.
“There are times when you’d want to have a new discussion with the contractor [and] that is not particularly unusual…” he remarked.
On Wednesday, Jagdeo criticised the move made by Minister Trotman to review the 1999 Exxon Mobil contract. The Opposition Leader told the media that a review of the contract allows for corruption but Trotman argued that “The Government has a right to review any contract that the PPP has signed. We have that right to do so and I think what they are worried about is when we start reviewing contracts, they will be embarrassed. So that is a right that we have as Government.”
Last year, Exxon Mobil announced that a “significant oil discovery” had been made in the Stabroek Block. The discovery made in May 2015 was the company’s first on the 6.6 million-acre Stabroek Block that was drilled to 5,422 metres.
Venezuela has claimed that ExxonMobil infringed on its territorial claim, and using this allegation, that country’s President Nicholas Maduro issued a presidential decree claiming sovereignty over Guyana’s ocean front.
The move by President Maduro came shortly after President David Granger was elected to office.
President Granger described Venezuela’s decree a “flagrant violation of international law,” while contending that Guyana’s western neighbour is trying to “trample on the rights of a smaller country in order to obstruct the sovereign right of Guyana to develop its natural resources.”
With the continued discovery of oil by ExxonMobil, Guyana could potentially be on course to become an oil-producing country as Trinidad and Tobago, and Venezuela; countries from which oil has been sourced over the years.