Monday, February 6, 2023

As blockbuster profits rise in Guyana, ExxonMobil moves to close shop in Equatorial Guinea

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ExxonMobil Corporation is reportedly planning to wind down oil production in Equatorial Guinea and close shop after its licence expires in 2026. According to a Reuters report, Exxon has cut production in Equatorial Guinea to less than 15,000 barrels of oil per day after peaking at more than 300,000 barrels of oil per day eight years ago.

The company has decided to decommission its Zafiro offshore production platform and tow it away, possibly next month, as future revenue from the platform would not have covered the cost of repairs, the report said.

The exit would reflect a wider move by major oil producers to reduce crude production in West Africa – which is considered a high-cost region where carbon emissions also are a problem. Reuters is of the view that Exxon is among many oil majors that are eager to shift investments to more lucrative projects in the Americas.

Indeed, by 2026, when Exxon exits Equatorial Guinea, it could have five oil projects on stream in the Stabroek Block, namely, Liza Phase One, Liza Phase Two, Payara, Yellowtail, and Uaru.

Importantly, the Uaru development is targeting approximately 1.319 billion barrels of oil, making it the largest project to be undertaken to date at the Stabroek Block offshore Guyana.

The projects already approved and sanctioned offshore the South American country were designed to develop approximately 450 million barrels from Liza Phase 1, 600 million barrels each from Liza Phase 2 and Payara, and 925 million barrels from Yellowtail.

These five projects alone are targeting 3.4 billion of the 11 billion barrels of oil equivalent discovered.

Supported by its Guyana operations, Exxon’s earnings for the year now total a US$43.1 billion. This is almost double the US$23 billion it made for the entire year of 2021.

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