In a significant move, the government of Guyana has officially revoked the oil prospecting license for the Frontera-CGX joint venture, effectively ending their operations on the Corentyne block. This decision follows a 30-day warning issued in February, signaling that the venture’s future was in jeopardy.
The Corentyne block was expected to offer a vital opportunity for diversification in Guyana’s oil industry, which is largely dominated by ExxonMobil. With ExxonMobil leading the charge in the Stabroek block, a prolific site holding over 11 billion barrels of oil equivalent, the Frontera-CGX partnership had positioned itself as an ambitious underdog hoping to claim a piece of the country’s growing oil wealth. However, this hope has now been dashed with the cancellation of their license.
While both companies have indicated plans to contest the decision, no specific details have emerged regarding potential legal challenges or behind-the-scenes discussions. What remains clear, however, is the wider implications of the move: ExxonMobil’s dominance in Guyana’s offshore oil industry is only growing stronger.
ExxonMobil, along with its partners Hess and CNOOC, continues to make strides in the region. The latest project, Longtail, promises to be the largest natural gas development in Guyana to date, with an output of 1.5 billion cubic feet of gas per day and 290,000 barrels per day of condensate. This development will encompass discoveries such as Longtail, Tripletail, and Turbot, marking the consortium’s eighth offshore project in the South American nation. With several oil projects already in operation, ExxonMobil and its partners are producing over 650,000 barrels of crude oil per day.
As ExxonMobil’s operations in Guyana expand, they are quickly becoming a force that could rival some OPEC members in terms of production.
For smaller players like Frontera and CGX, however, the financial realities are harsher. With oil prices fluctuating, with WTI near $67 and Brent just above $70, the conditions are not favorable for smaller ventures already facing significant challenges. ExxonMobil, on the other hand, appears well-positioned to continue its dominance.
The takeaway is clear: in Guyana’s competitive offshore oil sector, only those with deep financial reserves and the endurance of major players like ExxonMobil are likely to thrive.