Guyana’s government has officially yanked the plug on the Frontera-CGX joint venture, canceling its oil prospecting license for the Corentyne block. The writing had been on the wall since February, when officials gave the JV a 30-day warning.
Now, it’s official.
The Corentyne block was supposed to be a much-needed diversification play in Guyana’s oil scene, which is basically ExxonMobil’s playground. With the U.S. supermajor running the show in the Stabroek Block—home to over 11 billion barrels of oil equivalent—the Frontera-CGX partnership was a scrappy underdog trying to carve out a slice of the pie.
But now they’re out.
While the companies are predictably disputing the cancellation, no details have surfaced about any last-ditch legal plays or backroom negotiations. And let’s not forget what this really means: Exxon’s grip on Guyana’s offshore bonanza just tightened.
This move comes as Exxon, along with Hess and CNOOC, continues steamrolling ahead with its Guyana projects. The latest, Longtail, is set to be the region’s biggest natural gas development yet, with plans for 1.5 billion cubic feet per day of gas and 290,000 barrels per day of condensate. Longtail, which will include the Longtail, Tripletail, and Turbot discoveries, will be the consortium’s eighth project offshore the South American country. The supermajor and its partners have several oil projects on stream, collectively producing more than 650,000 barrels per day (bpd) of crude oil.
At this rate, Exxon’s Guyana operations might soon rival some OPEC members.
Meanwhile, oil prices are wobbling, with WTI hovering near $67 and Brent struggling above $70. Not ideal for smaller players like Frontera and CGX, who were already fighting an uphill battle. Exxon, however, will be just fine.
The message is clear: if you want to drill in Guyana, you’d better have deep pockets and Exxon-sized patience.
By Julianne Geiger for Oilprice.com
