Guyana must consider a number of factors when granting international oil companies access to explore in its waters, which, according to Minister of Natural Resources, Raphael Trotman, include the recognition that those with the resolve to forge ahead in the face of aggression will most likely be able to stay the distance.
Mr. Trotman said the move towards first oil and advancing plans to develop offshore reservoirs where several billion barrels of crude have already been found will not be done without some “vexation being caused elsewhere.” This is in reference to a border controversy the country has with neighboring Venezuela that stems from that country’s refusal to accept the validity of an award made 119 years ago settling the boundary between the two countries. Venezuela’s disgruntlement with the award came several decades after it initially accepted that it was binding.
Following the world class Liza discovery in 2015 the Bolivarian Republic then laid claim to large swathes of Guyana’s maritime space inclusive of its oil-rich waters. But even before then Venezuela had demonstrated a willingness to act with aggression against its smaller neighbour. In October 2013, the Venezuelan navy seized the Teknik Perdana; an oil exploration ship contracted by the US Company Anadarko that was operating in what Guyana maintains is its territorial waters.
The lone English-speaking South American country has also had a territorial dispute with Suriname which has since been settled. These combined threats to Guyana’s sovereignty have stymied the country’s ability to develop its natural resources for decades.
The Natural Resources Minister said it is in this context that careful consideration must be made when it comes to the granting of licences for exploration and production of petroleum resources.
Direct Negotiation or Open Bidding
Mr. Trotman told OilNOW on Friday that Cabinet has approved the hiring of an international firm and a detailed list is being compiled of companies that have aided in this process, with the intent of having Guyana benefit from their knowledge and expertise.
“Some companies may require direct negotiation. Much has been said about Petrobras from Brazil having a stake in our waters. So the question is; do you ask Petrobras to become part of the open bidding? Or do we have a short-listed group of companies that we say to them; ‘bid amongst yourselves’…So we are still to work those details out,” he said.
Mr. Trotman said Guyana is looking to achieve two objectives; that of maximum returns and to secure strategic partnerships, “because all of our development for the last 50 years has been overshadowed by a threat against our sovereignty.” He further added; “That threat is not going to go away. In fact we expect that as we move that potential into actual development (first oil) – that it is not going to be done without some vexation being caused elsewhere.”
“We need partners who are just not endowed with deep pockets but who have political clout, who are not afraid…to shy away if threatened,” Mr. Trotman pointed out.
US oil major ExxonMobil has been credited with forging ahead in its quest for oil offshore the South American country, even in light of potential aggression from Venezuela. The company, along with joint venture partners Hess and CNOOC Nexen, will bring first oil for the country in 2020 with the Liza Phase 1 development. This will be closely followed by Liza Phase 2 in 2022 and a third development at the Payara/Pacora reservoirs by 2023.
To date, ExxonMobil has discovered upwards of 3.2 billion barrels of oil in the 6.6 million acres Stabroek Block which stretches across Guyana’s entire Exclusive Economic Zone, bordering both Venezuela and Suriname.
With the US oil major already embedded offshore and a potential entry of Brazilian powerhouse Petrobras, Guyana’s hold on its territory would be considerably strengthened.
Already, several other companies are exploring in Guyana waters in search of their own world class discoveries.