A Big Day for Guyana, A Huge Day for New Oil
While it’s difficult to tear oneself away from the effects of the spreading coronavirus on global oil demand as the most significant fundamental oil story of the week, don’t forget about Guyana - our newest major offshore venue that defined the past year of fantastic frontier discoveries. What happens next could rock the rig for Exxon, its partner Hess, and the entire nation-in-waiting.
Guyana voted in presidential elections Tuesday, and by late Wednesday, both of the country’s two main political parties were claiming victory. For the oil market, it doesn’t particularly matter which of the parties wins as both are eager to exploit the new finds. But the current situation should have Exxon and its partners on edge.
The parties are strictly divided along ethnic lines - Afro-Guyanese and Indo-Guyanese - and each wants control of the brand new oil revenues are about to come pouring in with first production that has already begun - ahead of schedule - courtesy of Exxon. These elections aren’t about determining whether the deal cut with Exxon to tap into Guyana’s offshore potential was too sweet, to the detriment of the country. Yes, there’s been a lot of talk about this deal and attempts to tie it to corruption. There’s also been a lot of speculation that the deal could be changed, tweaked or otherwise dramatically reinvented depending on who ends up winning the elections.…