For all its high profile and standout status in the global oil and gas industry, ExxonMobil, which is currently focused on kicking off a major oil recovery exercise offshore Guyana, has had to face its own ‘demons’ in 2018, according to a report late in December by World Oil, the monthly oil and gas publication published by Gulf Energy Information.
On Boxing Day, World Oil reported that ExxonMobil was “headed for its worst annual performance since 1981,” its dip in fortunes coming as the company pursues “a seven-year, (US)$200 billion push for oil in South America” including its mission to realise ‘first oil’ for Guyana.
World Oil’s assessment of ExxonMobil’s immediate circumstances, however, does little to disguise the substantive strength of the company which it describes as having “one of corporate America’s strongest balance sheets,” though it asserts that the company is likely to have to face searching questions from its investors “at a time when oil prices are plummeting.”
Decision-making at ExxonMobil, World Oil says, could be more challenging in the period ahead “with Venezuela making aggressive naval maneuvers targeting the company’s ships in Guyana,” where the company is pursuing what World Oil describes as “one of its much-needed sources of new oil production.” All of this, the magazine says, against the backdrop of oil prices having “fallen more than 40% since reaching a high of $76.41 on Oct. 3.”
The article attributes ExxonMobil’s current challenges to what it describes as flag-planting deals, agreements which it said were made “at the peak of commodity prices over the past decade.” It points to the company’s huge US$35 billion investment in the US shale gas producer XTO Energy Inc in 2010 “when the real money was to be found in shale oil” and a further US$16 billion in Canadian oil sands since 2009. A further oil exploration pact with Russia signed under ExxonMobil’s former CEO Rex Tillerson subsequently became “caught behind a wall of sanctions” and was subsequently “abandoned,” World Oil says.
Guyana’s vast deep water reserves, World Oil says, are among ExxonMobil’s “five key development areas” that include other deep water resources in Brazil as well as “liquefied natural gas in Mozambique and Papua New Guinea and shale oil in the US – reserves which the article says, will “generate up to half of the company’s upstream earnings by 2025.”
In the wake of Venezuela’s December 22 intervention in ExxonMobil’s seismic activities being undertaken ahead of its ‘first oil’ undertaking in Guyana, the company has been swift to declare that the incident did not interfere with its operations. Perhaps, more significantly, Washington has been swift to issue a warning to Venezuela following the incident. Whether, given the pattern of Venezuela’s actions arising out of its long-standing territorial claim against Guyana, that will prevent the occurrence of further acts of aggression is unclear. Anxious that nothing gets in the way of the country’s long-awaited economic benefits from its vast oil reserves, Guyana has already launched a diplomatic offensive that extends from its Caribbean Community partners to the United Nations.