Exxon’s Generous Royalty Deal in Guyana Is Safe, For Now
Investors have been waiting to see what the outcome of the latest political crisis in Guyana would be in the aftermath of a string of major offshore discoveries that came along with a very generous royalties deal for Exxon.
The wait is potentially over. Guyana has now made it clear that it will revisit royalties contracts with an eye to bigger revenues for the government, but for now, the plan is to apply that to future contracts--not existing ones.
Fears were additionally stoked when regulators announced an investigation into possible corruption related to oil deals. Guyana’s State Assets Recovery Agency (SARA) announced last quarter that it was probing how those licenses were awarded, which sent another wave of anxiety through hedge funds invested in Exxon.
Again, SARA made it clear that while all deals are technically being probed “in fairness”, only two blocks (not having to do with Exxon) are really the target here.
Exxon’s royalties will remain intact, according to our political experts and government sources on the ground in Guyana. At stake are the 4 billion barrels of oil it’s just discovered, and no one wants to rock this boat.
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