ExxonMobil starts drilling off Guyana

OREANDA-NEWS. ExxonMobil launched a \$200mn oil exploration campaign offshore Guyana today in an area that neighboring Venezuela has long claimed as its own.

The Deepwater Champion rig that arrived on 2 March started drilling at the Liza prospect in the Stabroek block, Esso Exploration and Production Guyana chief executive Jeff Simon said in Georgetown today.

The block is located in the resource-rich Essequibo region that covers the western two-thirds of Guyana.

ExxonMobil operates the block with a 75pc stake. Shell has the remaining 25pc.

Aside from the rig with more than 200 crew, the key components of the US major's 10-year exploration project in Stabroek include four full-time support vessels, permanent helicopter support, two shore bases in Guyana and Trinidad and Tobago, and a waste treatment plant.

There was no immediate reaction from the foreign and energy ministries in Venezuela, where the government is honoring the second anniversary of the death of long-serving former President Hugo Chavez.

Venezuela's foreign minister Delcy Rodriguez sent a letter to Simon last month demanding the immediate cessation of the US major's exploration project.

"The Government of the Bolivarian Republic of Venezuela wishes to express its strongest protest against this serious situation … I take this opportunity to request the cessation of such activities as they will not be acknowledged or accepted under any such circumstances, since this will constitute …a hostile violation of the Venezuela territorial space," Rodriguez said in the letter obtained by Argus.

Venezuela "will not recognize any law or contractual obligations by third states, agencies, international financial institutions or private corporations that engages Guyana over the sovereignty or existing resources on the seafront of the Essequibo," the letter said. "Guyana has no valid land titles on the territory of Essequibo, including the seafront, which entitles such country to carry out projects of this magnitude."

Rodriguez added that drilling "in such significant depths could cause unacceptable environmental disturbances, which are prohibited by our legal framework and international agreements on environmental protection."

ExxonMobil has not commented on the letter. "Border issues are a matter for governments to resolve through bilateral discussions and appropriate international organizations," the company said earlier this week.

Another US company, Hess, said in January it would drill offshore Guyana as part of its 2015 exploration plans. In October 2013, Venezuela?s navy seized a research vessel working on behalf of US independent Anadarko in the Roraima block. The vessel was released in just over a week.

Venezuela's foreign ministry urged Guyana's government on 3 March to resume bilateral negotiations under UN auspices.

But Guyana's government already has made the decision to pursue other options under UN rules because Venezuela "for years" has used the bilateral talks to delay any settlement, a Guyanese foreign ministry official told Argus.

The official said today that Georgetown is exploring third-party mediation or arbitration, both of which Venezuela has previously rejected.

Venezuelan maps regularly include Essequibo as a disputed area within its borders.

The dispute is a legacy of British colonialism that precedes Guyana?s 1966 independence. The Republic of Guyana is a member of the British Commonwealth.