ExxonMobil is looking for a quick return on its investment in the tiny South American country of Guyana amid claims from the IMF that its contract was “favourable” to the oil giant.
ExxonMobil, which in addition to being a major upstream oil producer also makes industrial lubricants like Mobil DTE 25, discovered deep-water oil in
Guyana in 2015. It was the biggest deep-water discovery in a decade, with 3.2 billion barrels already been found and the possibility of more with further exploration. The company wants to start production in early 2020, which would be quite an achievement considering that it typically takes up to ten years to take a deep-water find to production.
While the company’s discoveries are huge, they more importantly have the potential to be very profitable. With breakeven costs estimated at $26/barrel, there is scope for profitable production even if oil prices were to take another severe hit.
ExxonMobil has defended its contract with Guyana, saying its terms are typical for a frontier country. It also points out that the current contract was already a renegotiation of a 1999 contract, and it included several new concessions to the government of Guyana. Likewise, neither the IMF nor Guyanese officials have suggested not honouring the contract, although the Mineral Resources Minister Raphael Trotman said he would push for the implementation of the IMF’s proposed tax reforms.
The Guyana field is important to ExxonMobil’s long-term strategy as it continues to replace aging fields and maintain production levels.