Guyana has canceled the Frontera-CGX joint venture’s license for the Corentyne block amid increasing consolidation by ExxonMobil in the region. The Longtail gas development, alongside other projects, solidifies Exxon’s dominant position, raising barriers for small players like Frontera and CGX in a volatile oil market.
The government of Guyana has officially terminated the Frontera-CGX joint venture by revoking its oil prospecting license for the Corentyne block. This decision follows a warning issued in February, indicating a lack of prospects for this partnership, which aimed to diversify Guyana’s oil industry dominated by ExxonMobil. The Corentyne block was intended to be a valuable asset, but now the venture is no longer operational.
Despite the companies contesting the cancellation, there are currently no public details regarding potential legal actions or negotiations to salvage the situation. The implications of this decision are significant, as ExxonMobil’s influence within Guyana’s offshore oil reserves has been further solidified. This move comes as Exxon, alongside Hess and CNOOC, progresses with substantial projects, including the Longtail gas development.
The Longtail project is notable for being the region’s largest natural gas development, aiming to produce 1.5 billion cubic feet of gas daily and 290,000 barrels of condensate per day. This marks the consortium’s eighth offshore project in Guyana, contributing to a current collective output exceeding 650,000 barrels per day (bpd) of crude oil. With the current trajectory, Exxon’s operations in Guyana are poised to rival those of some OPEC nations.
In contrast, oil prices are experiencing volatility, with WTI near $67 and Brent above $70, creating a challenging environment for smaller operators like Frontera and CGX, who are struggling to compete. Nevertheless, Exxon appears well-positioned to continue thriving under these circumstances, underscoring the necessity for substantial financial resources and resilience for any companies wishing to operate in Guyana’s competitive oil landscape.
In summary, the termination of the Frontera-CGX joint venture in Guyana signals an increasing consolidation of power by ExxonMobil in the region’s oil sector. With significant projects ongoing, Exxon, Hess, and CNOOC are reinforcing their positions while smaller players face stringent challenges. The landscape for oil exploration in Guyana is increasingly demanding, necessitating robust financial backing and strategic patience.
Original Source: oilprice.com
