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ExxonMobil new oil find in Guyana on Venezuela's disputed territorial waters

Venezuela potential area of contention Guyana. Venezuelan government has always claimed the land west of the Essequibo River and also the offshore areas with their area limits.

Petroleumworld 07 28 2017

On Tuesday, U.S. oil leading corporation ExxonMobil announced that more oil has been discovered offshore Guyana. The new finding is located in Payara reservoir of the in the Stabroek Block, within the Venezuela's territorial reclamation zone.

The new discovery brings the total oil reserves, estimated gross recoverable resource to between 2.25 billion oil-equivalent (boe) and 2.75 billion boe, according to the ExxonMobil press release.

“Payara-2 confirms the second giant field discovered in Guyana,” said Steve Greenlee, the president of Texas-based ExxonMobil Exploration Company.

The well was successfully drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Limited and encountered 59 feet (18 meters) of high-quality, oil-bearing sandstone in the Payara field.

It was safely drilled to 19,068 feet (5,812 meters) in approximately 7,000 feet (2,135 meters) of water. The well is only 12 miles (20 kilometers) northwest of the recently funded Liza phase 1 project on the Stabroek Block, which is approximately 130 miles offshore Guyana.

“Payara, Liza and the adjacent satellite discoveries at Snoek and Liza Deep will provide the foundation for world class oil developments and deliver substantial benefits to Guyana. We are committed to continue to evaluate the full potential of the Stabroek Block.” said Greenlee.

Venezuela and Guyana are locked in a battle over territorial land and waters that could put the development the Payara 's offshore hydrocarbons discovery in jeopardy and slow down its development.

Trouble in the dispute territorial waters

According to history, the Venezuela - Guyana dispute that dates back to the early 19th century. In 1835 the British Empire sent a German-born naturalist and explorer Robert Herman Schomburgk to conduct geographical research in British Guyana. In the course of his explorations he produced a map between Venezuela and British Guyana. The British government then commissioned Schomburgk to demarcate the territorial boundaries. This Schomburgk Line led to Venezuela protesting British encroachment on their territory, provoking the territorial dispute that has remained unresolved to this day. In 1850, after years of arguing over the territorial boundaries, both sides agreed not to occupy the disputed territory. Despite the agreement, the British Guyana Mining Company move into the territory to mine the gold deposits discovered in the zone. In 1897, Britain and Venezuela when in to an arbitration process, the Arbitration Tribunal delivered its award 1999, granting Britain control over the disputed land west of the Essequibo River (around 90% of the territory in dispute) in 1949, when a memo from Mallet-Prevost, one of the American arbitrators on the Tribunal, was made public posthumously. In the memorandum he said that the American arbitrators had been pressured to agree to the final deal by the Russian President of the Tribunal. In 1962 the Venezuelan government declared the 1899 agreement null and void and revived their claim for all of Guyana west of the Essequibo River. (peacepalacelibrary.nl).

On February 17, 1966, just before Guyana became an independent country, Britain and Venezuela Both agreed to an amicable resolution to the controversy and established a mixed commission within the Geneva Agreement 1966, to seek a solution. In the event that all bilateral efforts should fail to reach results, the Agreement gave the UN Secretary General the role of assisting the parties decide which of the methods for resolution contemplated in the UN charter should be used. In in 1970, Guyana as an independent country, revised the agreement situation and as a result signed the Port of Spain Protocol that essentially called for a 12 year postponement of any action on the dispute. Venezuela declined to renew the 12-year moratorium agreed in the Protocol of Port of Spain, coming in effect again the provisions of the Geneva Convention of 1966. Subsequently, the UN Secretary General in 1990 appointed a “good officer”  in charge of assisting the parties in choosing a means to settle the dispute, formally the reclamation stands today in the hands of the " good officer".

In 1999, Guyana gave ExxonMobil rights for the Stabroek block within the dispute territorial waters. In 2013, a exploration ship of U.S.-based Anadarko was detained by a Venezuelan warship within the dispute territorial waters. In March 2015, ExxonMobil hired a ship, the Deepwater Champion, to begin a drilling campaign, and in May of that year it announced the fist oil discovery, estimated in as much as 1.4 billion barrels of crude, according to the company.

Venezuela's new president Nicolas Maduro reacted to Exxon's discovery oil in Guyanese waters claimed by Venezuela saying it was all part of a “brutal campaign against Venezuela, financed by ExxonMobil." as reported in the media.

ExxonMobil moves ahead

Despite the issue with the venezuelan navy and Anadarko, Tillerson's ExxonMobil went ahead anyway.

Even do the new well in the Payara Reservoir is within the maritime boundary zone in claim by Venezuela as a venezuelan territory and of which there is an agreement signed between the two countries where they undertake not to exercise any prospecting or exploitation of natural resources while it lasts the treaty.

ExxonMobil President ExxonMobil at that moment, Rex Tillerson, now U.S. Secretary of State, said that the oil company was exploiting resources within the disputed territory under the authorization of Guyana, who had been in 2004 authorized by Venezuelan President Hugo Chavez to be explored in claim territory.

According to an article by Orlando Viera-Blanco, in the Venezuelan newspaper El Universal, as reported by Petroleumworld. Chavez, who when to Guyana's capital Georgetown on an official visit, announced on the visit that Venezuela would no longer oppose foreign investment in the area in claim, despite being prohibited. However, in 2015, Venezuelan President Nicolas Maduro decrees an extension of Venezuelan territory in Operational Areas of Integral Defense that includes the maritime territory of the Essequibo (Decree 1787 of 05/26/2015 GO 40.669, extended by Decree 1,850, approved By the AN 06/07/15).

The biggest oil find

“To put this in perspective, this is the equivalent of 1,400 Gulf of Mexico blocks,” Tillerson said. Exxon says the 3-D seismic survey that it conducted on the lease was the biggest in company history, NYT reported.

The Stabroek Block is 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

“Payara, Liza and the adjacent satellite discoveries at Snoek and Liza Deep will provide the foundation for world class oil developments and deliver substantial benefits to Guyana. We are committed to continue to evaluate the full potential of the Stabroek Block.” according to ExxonMobil press release.

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