Guyana Strengthens its Servitude to ExxonMobil's Energy Plunder

By Mision Verdad – Jan 14, 2025

ExxonMobil began the year boasting record profits in Guyana and anticipating even greater growth thanks to new projects. This success is based on an “agreement” with the Guyanese government that, under the pretext of national sovereignty, justifies its illegitimate claim on the Essequibo territory, a historically Venezuelan territory, and conceals its true reason for being: to protect the interests of the corporation that benefits disproportionately from its presence in this disputed area.

In 2024, the US oil company exceeded the maximum crude oil production levels established in the agreement signed with the Guyanese government to mitigate environmental risks in maritime and coastal areas.

The Guyanese media Kaieteur News explains the irregularities in three of the six oil projects authorized and operated by ExxonMobil Guyana Limited: Liza One, Liza Two and Payara, all located in the Stabroek Block. While Liza One was authorized for a maximum production of 120 thousand barrels per day (BPD), the Ministry of Natural Resources records a production of 163 thousand BPD.

Similarly, Liza Two and Payara, with a projected capacity of 220 thousand BPD each, have an actual production of 250 thousand BPD respectively. In total, ExxonMobil would be extracting 103 thousand BPD above the agreed limit.

Kaieteur News questions the exhaustiveness of the environmental impact assessment report, arguing that it omits the risks associated with the discharge of water and gas from underwater wells. According to the publication, this process, carried out at high temperatures, releases toxic substances into the marine environment, which implies environmental damage that is not directly addressed.

“Exxon Mobil treats the water and then dumps it into the sea, while part of the gas is burned and reinjected into the wells, a process during which it also emits substances dangerous to the environment,” it claims.

Former Department of Natural Resources environmental director Vincent Adams reinforces these concerns, saying ExxonMobil puts greed before environmental safety. Adams criticizes the oil company’s use of euphemisms such as “debottlenecking exercises,” terms he says mask the installation of more pipelines and equipment to increase production in an unbridled pursuit of profits.

A haven for ExxonMobil’s oil super-profit
There is a significant discrepancy in the information on the costs of illegally licensed oil production in Guyana, shedding further light on the profitability that ExxonMobil is making from its operations at the cost of the country’s subordination.

A report by ExxonMobil Guyana Limited (EMGL), which puts a break-even cost of $40 per barrel for its projects, is contrasted with an analysis by Rystad Energy, an independent energy intelligence firm, which estimates a cost of less than $20 per barrel for projects currently in production.

Rystad claims that offshore fields are among “the most competitive sources of supply outside the Middle East and off the coast of Norway,” outperforming onshore giants such as the US Permian Basin or Russia.

“What helps transform Guyana into a global heavyweight in offshore production is its competitive breakeven costs, which average $28 per barrel across all projects and less than $20 per barrel on producing projects,” notes Rystad.

This assessment contrasts sharply with the figure offered by ExxonMobil, backed by Guyana’s Ministry of Natural Resources. ExxonMobil Guyana Vice President Phillip Rietema said in July last year that the company’s operations are viable at a breakeven price of $40 per barrel. The Ministry, in turn, breaks down these figures, indicating a breakeven cost of $35 for Liza 1 and $25 for Liza 2.

United States Is Converting Guyana into a Military Enclave

Five years of illegal exploitation
In December 2024, on the fifth anniversary of ExxonMobil’s illegal exploitation in territorial waters that are yet to be defined between Guyana and Venezuela, the company issued a statement highlighting alleged mutually beneficial figures in the agreement with Georgetown.

The statement reads that, in five years, oil production has made Guyana the third largest producer per capita in the world, that more than 6,000 Guyanese work in the sector thanks to ExxonMobil, and that the company and its suppliers have invested more than two billion dollars in more than 1,700 local companies.

ExxonMobil’s “celebration” hides the structural deficiencies of the oil agreement and the government’s management of resources, in addition to the manifest illegality of operating in a disputed area.

The contract exempts oil companies from direct tax payments, a responsibility assumed by Guyana, and allows for the recovery of 75% of investments before the distribution of the remaining 25%. Of this percentage, Guyana only receives 12.5%, plus a 2% royalty. This structure is combined with the lack of independent mechanisms for verifying production: the country relies exclusively on data provided by ExxonMobil.

The lack of transparency extends to the management of the Natural Resources Fund (NRF), created in 2021 to regulate oil revenues. Despite significant withdrawals from the fund (607.6 million in 2022 and 1 billion in 2023), the government has not publicly specified the “national development priorities” that are financed by these funds, as required by law.

Tom Sanzillo of the Institute for Energy Economics and Financial Analysis (IEEFA), quoted by Kaieteur News, notes that instead of prioritizing savings, the government has invested in infrastructure and energy projects that could benefit ExxonMobil more than the population, without a public accountability process. Arthur Deakin of Americas Market Intelligence agrees that there is a lack of a clear vision for using oil revenues to improve the lives of Guyanese despite the rapid growth of the sector.

The government has firmly ruled out the possibility of renegotiating the contract. On December 30, 2024, the President of Guyana Irfaan Ali rejected calls from the opposition and activists, arguing respect for the “sanctity of contracts” and the need to “maintain investor confidence.”

Rather than seeking a review of the contract, the government has authorized six new FPSO projects, to increase oil development in the Stabroek block, operated by ExxonMobil.

Pretexts for US military presence
The expansion of ExxonMobil’s extractive activities illegally authorized by Guyana coincides with a significant increase in the US military presence in the country. As evidenced in a previous post on Misión Verdad, despite the meeting between Presidents Maduro and Ali in 2023, aimed at fostering dialogue on the Essequibo controversy, military cooperation between the United States and Guyana continued to intensify in 2024.

This permissiveness of the Guyanese government towards ExxonMobil operations facilitates the deployment of US military assets, turning Guyana into a logistical platform and operations center that exacerbates regional tensions.

The interconnection between economic and military interests creates a scenario that seeks to threaten Venezuela’s sovereignty in 2025, especially given Trump’s assumption of the US presidency, which is already perceived as a factor that could intensify tensions.

(Misión Verdad)

Translation: Orinoco Tribune

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