Guyana Terminates Frontera-CGX Joint Venture, Exxon’s Dominance Solidified

Guyana has canceled the Frontera-CGX joint venture’s oil prospecting license for the Corentyne block, which strengthens Exxon’s dominance in the region. This decision follows a warning earlier in the year and comes as Exxon advances with major gas developments, raising questions for smaller players amidst fluctuating oil prices.

Guyana’s government has officially terminated the Frontera-CGX joint venture, revoking its oil prospecting license for the Corentyne block. This decisive action follows a warning issued in February, indicating the government’s intention to cut ties. The Corentyne block was anticipated to provide essential diversification in Guyana’s oil sector, heavily dominated by ExxonMobil, which manages the lucrative Stabroek Block, containing over 11 billion barrels of oil equivalent.

The cancellation of the license indicates a stronger hold for Exxon in Guyana’s offshore operations as Frontera and CGX, the joint venture partners, contest the decision without revealing any potential legal recourse or negotiations. This event is significant, as it consolidates Exxon’s dominance in the region, amid its ongoing developments in Guyana, including the Longtail gas project, which is expected to be the largest natural gas venture in the area, producing 1.5 billion cubic feet of gas per day and 290,000 barrels of condensate.

This latest endeavor marks the consortium’s eighth offshore project in the country, highlighting Exxon and its partners’ substantial output of over 650,000 barrels per day of crude oil. Under current circumstances, Exxon’s operations in Guyana could soon compete on the same level as some OPEC members, while smaller entities like Frontera and CGX struggle with declining oil prices, with WTI near $67 and Brent around $70. This situation underscores the growing challenges for lesser players in Guyana’s oil landscape, reinforcing the message that substantial financial backing is mandatory for engagement in this sector.

In conclusion, Guyana’s decision to revoke the Frontera-CGX joint venture license emphasizes Exxon’s unprecedented control over the country’s oil resources. As Exxon continues to expand its operations through large-scale projects with significant production potential, smaller companies face immense challenges amidst fluctuating oil prices. The landscape increasingly reflects a need for substantial financial strength and strategic patience to engage successfully in Guyana’s promising oil sector.

Original Source: oilprice.com