Venezuela Wins the Fight Against ExxonMobil in the Stabroek Block

By Misión Verdad  –  Jul 7, 2025

Recently, it was reported that the oil multinational ExxonMobil has returned 20% of the Stabroek offshore oil block to the government of the Cooperative Republic of Guyana.

The block in question is part of the maritime territory arbitrarily administered by Guyana, which is part of the undelimited waters due to Venezuela’s claim over the Essequibo region.

The US company has made effective the delivery of 9% of the block and it is expected that the delivery of the remaining 11% will take place soon. It is a total maritime area of approximately 2,534 km².

However, although it is a minority portion of the bloc, it is precisely this section that has the greatest geopolitical sensitivity, as it is the closest to the exit to the Atlantic from the Venezuelan Orinoco delta.

Guyana’s contractual issues
The process of returning 20% of the Stabroek block took place within the legal framework of the Petroleum Activities Act (PAA) of the Guyanese government.

According to Guyana’s Ministry of Natural Resources, ExxonMobil fulfilled with its contractual obligations by presenting technical updates on areas of interest, including the identification of non-commercial areas that should be reincorporated into the Guyanese State.

This is part of a renewal agreement of the exploration license, which implies that ExxonMobil had to review its operational plan and adjust the areas where no viable discoveries had been found or where insurmountable geopolitical barriers existed.

The Guyana Geology and Mines Commission (GGMC) actively participated in the technical and legal evaluation of the process, ensuring that only those plots without productive activity or under commercial evaluation were returned.

In this way, ExxonMobil returns the section of the Stabroek block to Guyana, declaring that they have not developed commercial activity from there by opening wells, as stated in the irritated contracts they have with Guyana. What is striking about the case is that the company indicated that it had not completed the exploration process, which suggests that they have simply decided to withdraw from that section of the project.

However, it is expected that Guyana may reallocate this section of the block soon if another company decides to carry out a technical feasibility to develop exploration and production activities in said segment.

The dispute with Venezuela
The influence of the territorial dispute with Venezuela is crucial in this decision. The Stabroek block is located off the coast of the state of Guyana in Essequibo, a territory claimed in accordance with legitimate Venezuelan historical and legal rights, according to the 1966 Geneva Agreement.

In this context, it can be inferred that ExxonMobil tacitly recognizes that certain parts of the block they cannot be explored because historically and sovereignly they belong to Venezuela.

These events mark a milestone in the policy of American companies in Guyana, as they seek to reduce their legal and diplomatic exposure in conflict zones. Although no mining activities had been carried out in that specific area, ExxonMobil has probably chosen to withdraw to minimize risks associated with legal uncertainty.

Although the majority of the block’s surface is within the disputed area, that sector is closer to the line that corresponds to the maritime projection of the Orinoco Delta, as seen in the black circle in Figure 2.

 

Bilateral tensions have escalated in recent years, especially following the Venezuelan military presence in waters near the bloc and Guyana’s implementation of false flag operations. The Bolivarian Navy has vessels intercepted dedicated to petroleum seismic studies in the open sea, considering this as violations of Venezuelan maritime space, and has reported the presence of up to 28 drilling vessels and tankers in the area.

Faced with this scenario, ExxonMobil chose to mitigate risks, given that the tension over the sovereignty of Essequibo increases the possibility of damage due to legal conflicts, military escalation or state actions, such as expropriations or maritime interdictions. This forces the company to take out additional insurance against risks of war, civil liability and expropriation, which makes the policies more expensive. Additionally, insurers may refuse coverage in high-risk areas or impose geographic exclusions.

Other implications
Despite having returned a portion of the Stabroek block, ExxonMobil maintains its operations in the rest of the area, where it already produces more than 600 thousand barrels per day and plans to reach one million in 2027 with the development of the whiptail project. In fact, the company plans to triple its production capacity in Guyana in the next five years, consolidating its position as one of the major producers oil in the region.

This approach reflects the reorientation of the strategy towards operational sustainability and the reduction of conflicting exposures. By staying in the less critical Stabroek bloc areas around the dispute, ExxonMobil can continue to generate revenue without being drawn into complex legal or diplomatic conflicts. The company will not have to carry additional benefits from insurers if they increase their costs for reasons of geopolitical risks.

Venezuela Rejects Arrival of FPSO One Guyana in Disputed Waters

In addition, it recently signed contracts for the installation of new FPSO (Floating Production Storage and Offloading) systems, as part of its decision to expand its infrastructure in Guyana.

However, the company faces other financial challenges, such as the Guyana government’s objection to recovery costs close to $300 million, which could affect their profit margin. It is also involved in legal disputes with other companies, like Chevron, for acquisitions and operating rights in Guyana.

The return of part of the Stabroek block appears to be part of a broader ExxonMobil strategy to focus on lower risk and higher return areas in Essequiban and Guyanese waters.

Although ExxonMobil has not declared the presence of resources that stimulate greater investment in the 20% that comprises the northwest area of Stabroek, the territorial dispute directly influenced the corporate decision, demonstrating how geopolitical risks adversely affected the multinational with regard to investment strategies, insurance costs and potential legal costs.

 

(Internationalist 360º) with minor additional editing by Orinoco Tribune