Exxon Mobil's leonine and voracious relationship with Guyana

In 2024, the American oil company Exxon Mobil exceeded the maximum level of crude oil production foreseen in the agreement signed with the Government of Guyana, which was signed to reduce the risks of environmental impacts on maritime and coastal areas, including those of the Venezuelan state of Guayana Esequiba.

In the current pre-election context of the neighboring country, the Guyanese media Kaieteur News accuses the Guyana government of ignoring the risks to the environment that violations of the environmental agreement imply, and immediately shows the exceeded production figures in three of the six projects sanctioned and managed by Exxon Mobil Guyana Limited.

He said that an environmental impact assessment was carried out on the Liza One, Liza Two and Payara projects located in the Stabroek Block. He explained that the first was designed to operate up to a peak of 120.000 barrels per day. The Ministry of Natural Resources registers 163.000 BD.

In the Liza Two and Payara projects, Exxon Mobil is scheduled to produce 220.000 barrels of oil each, while they are producing 250.000 barrels of oil each. In total, they are producing 103.000 barrels of oil above the agreed limit.

The media goes beyond the mere violation of the agreed quota and even questions the fact that the environmental impact assessment report does not cover the risks caused by the water and gas generated in the process of extracting oil from the seabed, which carry with them toxic substances at high temperatures.

“Exxon Mobil treats the water and then dumps it into the sea, while burning some of the gas and re-injecting it into the wells, a process during which it also emits substances that are dangerous to the environment,” he said.

It echoes the opinion of the former environmental director of the Ministry, Vincet Adams, who said that the oil company not only sacrifices safety limits in the name of greed, making use of manipulative terminology such as "decongestion exercises, which in practice means more pipelines and equipment to increase production in an excessive search for obscene profits."

In 2016, Exxon Mobil and the Government of Guyana signed a production-sharing agreement, which has been and continues to be severely questioned even by organizations such as the International Monetary Fund (IMF).

In July 2017, the IMF’s Fiscal Affairs Department wrote in a restricted report that the contract was “too generous to the investor” and contained “a number of loopholes,” noting that “current production-sharing agreements appear to have royalties well below what is observed internationally.”

In March 2024, Open Oil, a German analysis firm, estimated that Guyana would not capture more than 54% of the contract's financial resources. By way of comparison, it said that Ghana's offshore oil deal gave it 64%.

“A comprehensive analysis shows that, in terms of surface area, Guyana’s lease is more than 100 times larger than the United States’ lease in the Gulf of Mexico. The Guyanese government will pay taxes on behalf of the contractor and will be responsible for reimbursing all development costs in order to access the investment revenues, estimated at $20.000 billion by 2024.”

He also points out that a contractual clause also prohibits Guyana from unilaterally renegotiating, amending or modifying the agreement. A 45% stake in the Stabroek Block is held by a consortium comprised of a private US company called Hess Guyana Exploration and the state-owned China National Offshore Oil Corporation; the contract also requires that the consortium be compensated if any government action were to affect the accrued economic benefits.

A February 3, 2020, report by anti-corruption group Global Witness, later withdrawn following pressure from religious groups in Guyana, called on the Guyanese government to renegotiate the controversial 2016 production-sharing agreement with Exxon Mobil.

He said Exxon Mobil's aggressive tactics with inexperienced Guyanese officials would cause Guyana to lose up to $55 billion in an exploitative oil contract, citing analysis he commissioned.

The firm made the following recommendations:

1. The Guyanese government should renegotiate Exxon’s oil licence in Stabroek. The government should seek a share of the revenues that matches international standards, increasing Exxon’s financial obligations such as royalty and income tax payments. Before negotiations, the government should commission an independent assessment to determine what the country deserves from the licence, although Global Witness believes a minimum equitable share of oil revenues for Guyana would be 69%. Negotiations should be conducted by impartial government officials, drawing on expert advice. Additional revenues received as a result of renegotiation can be invested in development priorities and managed within a natural resource fund that incorporates meaningful and transparent engagement with civil society. They can also be used to fund the ambitions contained in the Green State Development Strategy, ensuring that the country’s economy is stronger and ultimately not dependent on the oil sector.
2. In the context of the climate emergency, and in view of the revenues Guyana could receive from the Stabroek oil fields, the Guyanese government should impose a moratorium on any new drilling. Guyana could allow Exxon to extract oil from the 16 wells it has already drilled, but not allow additional drilling on the Stabroek licence. Guyana should also cancel the other nine licences it had been allocated and not grant any new ones.
3. The Government of Guyana should investigate the process by which the Stabroek licence was negotiated, which should include an analysis of whether an apparent conflict of interest prevented Raphael Trotman, Minister of Natural Resources, from negotiating fully in the country's best interest.
   The US company pays the Guyanese government just 2% of the royalty, or exploitation tax, to the owner of the resource, while in Venezuela the rate is 10%.
   After having previously denied it, the Guyanese government also admitted in 2017 through Trotman that it had received financial assistance from Exxon Mobil in the case of a border conflict with Venezuela, according to the media outlet News Source.

• China's oil demand more concerned than Donald Trump
• In the oil world, only cashews rose in price in November