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- The world’s largest oil discovery is located in the Stabroek block offshore Guyana.
- ExxonMobil is developing the Stabroek offshore block in partnership with Hess and CNOOC.
- Lisa’s Well has put Guyana on the path to wealth.
- Oil production in Guyana commenced at the end of 2019.
- Guyana has the third fastest growth rate in oil production outside of OPEC.
Many energy companies still feel regret over having missed the opportunity to develop a significant oil discovery and benefit from its extensive crude reserves.
Initially, these companies did not recognize the substantial economic potential of the Liza field in Guyana, particularly within the Stabroek block offshore.
The Stabroek block is Guyana’s most valuable oil asset, with reserves estimated at 11 billion barrels. It is operated by a three-way partnership led by the US company ExxonMobil, which holds a 45% interest, along with Hess Corp, which has a 30% stake, and the China National Offshore Oil Corporation (CNOOC), holding 25%.
According to the Washington-based Energy Platform’s database of oil and gas fields, the Liza well was the first oil discovery in this small South American country in 2015, made by ExxonMobil and its partners. The number of discoveries in this block has since exceeded 30 new offshore oil and gas finds.
Oil exploration in Guyana
By late 2013, oil exploration in Guyana was not a priority for US energy giant ExxonMobil and other significant companies, as reported by Bloomberg.
There was an oil discovery located a mile beneath the surface known as Liza, named after a local fish, and the cost to drill this well was projected at a minimum of $175 million.
However, many decision-makers at ExxonMobil were not keen on taking that risk to commence exploration in this region, which was also true for other significant players in the oil sector.
ExxonMobil now oversees the Liza well, which contains 11 billion barrels of recoverable oil, valued at nearly $1 trillion at current market prices.
Oil production platforms in Guyana’s Stabroek Block – Image from ExxonMobil website
Lisa’s field
The Liza field has transformed Guyana from one of the poorest countries in Latin America into a promising nation, poised for significant economic development.
Guyana is projected to surpass Venezuela as Latin America’s second-largest oil producer after Brazil, according to the energy platform.
Guyana has become central to ExxonMobil’s resurgence in the aftermath of the COVID-19 pandemic. The Texas-based company owns a 45% stake in the Liza discovery, with a production start-up cost of less than $35 per barrel, making it one of the most profitable oil fields outside OPEC.
With crude oil currently trading at $85 per barrel, the Liza well will remain profitable even if a transition away from fossil fuels results in a significant decrease in oil demand, leading to a halving of crude prices.
Lisa’s Field… An Exciting Story
The tale of the Liza field is filled with intriguing details about the history and future of crude oil, based on interviews with individuals who have worked at the Liza field, most of whom have since departed from ExxonMobil.
The story reveals how many within ExxonMobil overestimated the significance of the transition from oil to renewable energy.
“When everyone else was pulling back, we were advancing,” stated Liam Malone, ExxonMobil’s president of production.
Since oil production began in Guyana at the end of 2019, ExxonMobil’s share value has more than doubled, yielding the highest returns amongst major oil companies.
The narrative surrounding Liza underscores the challenges of relying solely on market dynamics to forecast the end of the fossil fuel era.
Advocates for the green movement had hoped that technology would facilitate the transition from oil, which has become more difficult to source, to solar, wind, and other renewable energy sources.
Environmental campaigners now worry that ExxonMobil will generate substantial profits during a slowdown in the energy transition, while others will bear the repercussions of the environmental harm caused by drilling to both Guyana’s climate and natural habitats.
“ExxonMobil is polluting the ocean and atmosphere without being held accountable for those damages,” stated Melinda Janke, a Guyanese environmental lawyer.
30 companies
ExxonMobil’s rivals who did not capitalize on the Liza discovery are likely to regret missing out on the profitable economic possibilities that the field offers.
The list of these 30 companies includes American Chevron and multinational Shell, as reviewed by the specialized energy platform.
Chevron is currently working to finalize its acquisition of Hess Corp, a US company and one of ExxonMobil’s partners in Guyana, owning a 30% stake in the project.
However, the agreement faces obstacles due to ExxonMobil’s objection, as it has filed a lawsuit against Hess this year (2024), asserting that it possesses the right of first refusal (ROFR) for the stake, while Hess contends that this right does not apply to merger transactions.
The right of first refusal is typically utilized in contracts to manage the business dealings of parties involved in tri-party agreements, granting the party holding this clause the authority to weigh in on any contractual changes.
Oil production in Guyana
Guyana has experienced a surge in oil production rates over the last five years, following the commencement of crude extraction by foreign developers in 2019 through to last year (2023).
Guyana has the third fastest growth rate in oil production outside of OPEC during the past three years.
Growth in Guyana’s oil production ranked third after the United States and Brazil from 2020 to 2023, followed by Norway, China, Mexico, Canada, Argentina, Qatar, and Oman in that order.
Since 2019, Guyana’s oil production has escalated, reaching approximately 645,000 barrels per day by early 2024, according to a report from the US Energy Information Administration.
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Read in this article
- The world’s largest oil discovery is located in the Stabroek block offshore Guyana.
- ExxonMobil is developing the Stabroek offshore block with Hess and CNOOC.
- Lisa’s Well Puts Poor Guyana on the Road to Riches.
- Oil production in Guyana began during the end of 2019.
- Guyana has the third fastest growth rate in oil production outside OPEC.
The oil exploration landscape in Guyana underwent a seismic shift with the remarkable discovery in the Stabroek block. This region is now recognized as one of the world’s most significant oil reserves, housing a staggering potential of up to 11 billion barrels of oil. Initially, many energy giants overlooked the economic viability of this block, resulting in regret among those who missed the chance to invest early.
The Stabroek block is primarily managed by a consortium comprising ExxonMobil, Hess Corporation, and the China National Offshore Oil Corporation (CNOOC). ExxonMobil holds a 45% stake, Hess owns 30%, and CNOOC controls 25%. The collaborative effort among these companies has rapidly intensified the extraction capabilities necessary to capitalize on this booming oil market.
Oil Exploration in Guyana
Prior to 2013, oil exploration in Guyana was not a focal point for major players like ExxonMobil. Many were hesitant to commit to the uncertainties surrounding offshore drilling, especially considering the high costs involved. The Liza well — named after a local fish but perhaps better named for its transformative potential — was regarded with skepticism. Despite the daunting initial drilling cost of $175 million, ExxonMobil’s determination led to the successful discovery of the Liza field in 2015.
Lisa’s Field
The Liza field has not only altered narratives for oil production but has also given rise to aspirations for economic growth in Guyana. Once considered one of the lower-middle-income countries in Latin America, Guyana is now positioned to become the second-largest oil producer in the region, surpassing Venezuela. ExxonMobil has emerged as a central figure in this transformation and has seen its stock value double since oil production commenced in late 2019.
With production costs beneath $35 a barrel, the Liza well can sustain profitability even amidst fluctuating crude prices. As crude oil currently trades around $85 a barrel, these margins offer an enthusiastic outlook for ongoing production efforts.
Lisa’s Field… An Exciting Story
The history of the Liza field encapsulates a variety of perspectives and experiences from individuals within ExxonMobil and its partners. Many who were instrumental in harnessing the field’s potential have since moved on, but their narratives highlight critical moments of decision and foresight amidst a shift towards renewable energy.
ExxonMobil’s president of production, Liam Malone, reflects on their aggressive approach during a time when competitors were retreating from oil. This divergence has enabled ExxonMobil to capitalize on the Liza field, demonstrating faith in traditional energy sources even as the green movement gained traction.
Despite concerns from environmental advocates about the implications of extensive drilling on Guyana’s delicate ecosystems, ExxonMobil’s investment has positioned the company to reap substantial profits, potentially at the environmental cost.
30 Companies and Missed Opportunities
The landscape is dotted with energy companies who may harbor regrets regarding their hesitance to engage with the Liza discovery. A notable list of firms includes Chevron and Shell, who have allegedly shown interests too late and now navigate the complex realities of an evolving industry.
For instance, Chevron is currently pursuing the acquisition of Hess Corporation. This maneuver is complicated by legal disputes over rights of first refusal held by ExxonMobil, casting shadows on the alliance’s future dynamics.
Oil Production in Guyana
The rapid increase in Guyana’s oil production since the inception of foreign exploration efforts in 2019 cannot be understated. Presently, Guyana boasts the third fastest oil production growth rate outside OPEC, trailing only behind the United States and Brazil. The impact of this production surge is monumental; crude extraction has escalated to 645,000 barrels per day, as reported by the US Energy Information Administration.
| Year | Production (Barrels Per Day) | Remarks |
|---|---|---|
| 2019 | N/A | Commencement of production |
| 2020 | 100,000 | Initial production ramp-up |
| 2021 | 300,000 | Significant increase in output |
| 2023 | 645,000 | Projected to increase further |
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