ExxonMobil halts Guyana work on Venezuela brush

ExxonMobil said it suspended seismic surveys on the Stabroek block off Guyana after a research vessel it had contracted was approached by a Venezuelan navy ship.

The 22 December incident is the latest flare-up in a 19th century territorial dispute in which Caracas claims sovereignty over Guyana's western Essequibo province. For Venezuelans, the Guyana claim is a rare issue that unites the government and its opponents at a time of severe economic crisis in the Opec country.

Since 2015, ExxonMobil has discovered an accumulated 5bn bl of oil equivalent (boe) of resources on a block in the disputed area. The US major plans to start producing 120,000 b/d in March 2020, ramping up to 750,000 b/d by 2025, catapulting sparsely populated Guyana into the upper ranks of oil-producing countries.

After the brush with the Venezuelan vessel, the Ramform Tethys survey ship operated by Norwegian contractor PGS left the western section of the Stabroek block and is headed eastward, ExxonMobil and PGS said.

"Seismic operations on the Stabroek block have been paused until they can be safely continued," ExxonMobil said. "Our main concern is for the safety of crew members and others in the area." ExxonMobil is in communication with "the necessary authorities" on the encounter.

The Venezuelans did not board the Bahamas-flagged Ramform Tethys that has a crew of 70, PGS said.

"Guyana rejects this illegal, aggressive and hostile act perpetrated by Venezuela which once again demonstrates the real threat to Guyana's economic development," Guyana's foreign minister Carl Greenidge said, adding that the government will bring "this latest act of illegality and blatant disrespect for Guyana's sovereignty to the attention of the United Nations."

ExxonMobil operates the 6.6mn acre (26,800km2) Stabroek block with a 45pc stake. US independent Hess holds 30pc, and the remaining 25pc belongs to Nexen, a unit of Chinese state-owned CNOOC.

Venezuela's foreign ministry said the navy's patrol vessel Oceanico Kariña (PO-14) encountered two seismic vessels, which it identified as "Ramfor" and Trinidad and Tobago-flagged Delta Monarch, providing their maritime coordinates in the Orinoco Delta of Venezuela's "undoubtable sovereignty".

There was no immediate confirmation from ExxonMobil or Trinidad's Delta Logistics about the second vessel cited by Venezuela.

According to the Venezuelan foreign ministry, the vessel captains indicated that they had permission from Guyana to navigate in the area, but were informed by Venezuela that Guyana has no jurisdiction there.

Venezuela has contacted the office of the UN secretary general and issued a note of protest to the government of Guyana, and calls on Guyana to reestablish dialogue over the disputed area, the ministry said.

Two Venezuelan military sources told Argus the incident likely stemmed from the initiative of the navy vessel's captain, rather than from Caracas. The Venezuelan vessel was described as a gun-laden corvette used to gather intelligence, pursue drug traffickers and patrol the offshore Essequibo area.

The disputed territory had been mostly subdued since October 2013, when Venezuela's navy seized the Teknik Perdana research vessel that had been studying the Roraima block on behalf of US independent Anadarko. The vessel and the crew were released after a week. Anadarko has not restarted work on the block.

After raising objections to ExxonMobil's drilling plans in 2016, Caracas went silent on the matter as it focused on containing internal strife.

Guyana rejected a call in April 2018 from Venezuela to return to seeking a diplomatic solution. This followed a January 2018 UN request for the International Court of Justice to settle the dispute, after the UN failed to mediate an agreement.

The dispute has not affected other companies with offshore licenses in Guyana's acreage that include Canadian independent CGX, France's Total, UK-listed Tullow and Spain's Repsol.