Guyana's President Irfaan Ali speaks in the capital Georgetown, during a friendly meeting with Brazil's President Lula, February 2024.
AFP via Getty ImagesExxonMobil
And they’re just getting started, with plans to invest tens of billions more, with three additional FPSOs on order from SBM Offshore. ExxonMobil’s first discoveries here were in 2016; by the end of 2026 they’ll likely be pumping 1.2 million barrels per day. “Guyana surpasses all expectations,” declared analyst David Deckelbaum of TD Securities in a report this week.
Which is why the winner of Big Oil earnings season so far has to be Mohamed Irfaan Ali, the president of Guyana. Ali became a folk hero to the oil industry earlier this year when during the taping of an interview with the BBC, Ali pushed back against interviewer Stephen Sackur when he asked about the climate impact of Guyana’s nascent oil industry and what gives Guyana “the right to release all this carbon?”
Ali, 43, pointed his finger at Sackur and lambasted the hypocrisy of developed nations trying to tell Guyana how much oil drilling is the right amount. “I am going to lecture you on climate change,” said Ali. Insisting that Guyana has “the lowest rate of deforestation in the world” and “because we have kept this forest alive that stores 19.5 gigatons of carbon” that no matter how much oil they pump “Guyana will still be net zero”
Representing the Peoples’ Progressive Party, Ali came to office in 2020 with the narrowest of margins after a recount. Trained in urban planning and having worked in project management at the Caribbean Development Bank, Ali is now tasked with divvying up what could be tens of billions of dollars in oil revenue over the coming decades. Exxon has already sent $4.2 billion to Guyana’s natural resources fund.
There’s talk to distributing oil funds directly to the population of 800,000 citizens mostly descended from African slaves and indentured laborers from India who mined gold and grew rice and sugarcane. Guyana became independent from Great Britain in 1966, and largely languished. In 1978 more than 900 followers of cult leader Jim Jones killed themselves at their jungle compound in Jonestown, Guyana. President Ali has demanded that the descendants of past Guyana slave owners pay reparations.
In 2016 Exxon made its first Guyana oil discovery. Since then GDP per capita has exploded from $11,000 to $80,000. The oil industry now employs 6,300 and Exxon’s consortium pays local contractors some $400 million a year. To win over the hearts and minds of cricket fans, Exxon sponsors the Caribbean Premier League and Guyana’s Amazon Warriors team.
Shai Hope of Guyana Amazon Warriors, 2022.
CPL T20 via Getty ImagesAli intends for Guyana to get paid both for its oil and for not cutting its trees. Hess, in a combination green washing and good P.R., in 2022 agreed to pay Guyana $750 million over a number of years for carbon credits tied to forests.
Chevron
As Exxon stated recently: “We filed for arbitration to confirm our rights and establish the value that the Chevron/Hess transaction places on the Guyana asset. This will allow us to evaluate options to maximize the value for our shareholders.” Translation: we want to get paid.
Exxon doesn’t need to crowd out Chevron. It’s good to spread the risk around. There’s still execution risk in deploying the Yellowtail, Uaru and Whiptail FPSOs and drilling up to 50 wells to support each of them.
Political risk is real as well. Neighboring Venezuela already voted to annex the Guyanese state of Esequiba. The U.S. military stepped up joint air and sea patrols with Guyana with the production of first oil in 2020.
Naturally oil drillers are looking for the next Guyana, and they think they’ve found one — on the opposite side of the Atlantic, offshore Namibia in west Africa. After decades of frustration, in the last couple years both Shell and TotalEnergies have made big oil finds there, with Total expecting to install an FPSO by the end of 2025.
The outsized winner in Namibia so far looks to be Portugeuse oil company Galp, which claimed in April to have made a 10 billion barrels discovery at the offshore Mopane prospect, in which Galp holds 80%. Shares in Galp jumped 25% on the news. With those kind of numbers, Namibia could soon be vying with Guyana for the title most improbable new oil giant.
