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Guyana comes to Houston, seeking partners to develop newfound oil wealth

May 9, 2019

The tiny South American nation of Guyana is making its first major foray into Houston, sending a delegation to the Offshore Technology Conference and holding a downtown forum to find partners as it develops its offshore oil fields.

Exxon Mobil and its New York partner Hess Corp. already have made 13 major oil discoveries off the coast of Guyana in the last four years, pumping billions of dollars into new projects with initial oil production coming online in early 2020. Outside of West Texas’ Permian Basin, Exxon is investing more in Guyana than anywhere else in the world.

A rural, rain-forested nation with a population of more than 700,000 — versus 7 million just in metro Houston — the political and business leaders have suddenly had to learn about the oil industry after never having had much petroleum business at all. The country will hold the inaugural Guyana Petroleum Summit on Thursday in downtown Houston.

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“It’s a very, very fast learning curve from not knowing anything about oil and gas to having to do it,” said Owen Verwey, chief executive of the Guyana Office for Investment, the government’s economic development arm. “This is like dropping someone in the ocean who doesn’t know how to swim.”

Guyana’s government has placed its emphasis on forming partnerships and ensuring that Guyana captures the financial windfall to support long-term economic growth, Verwey said. They don’t want the big oil companies to just come in, reap their profits, and leave with Guyana having little to show for it.

Touting the idea of Guyana as “the new oil and gas frontier,” officials see opportunities for Houston energy services companies — from drillers to parts manufacturers — to come do business in Guyana, partner with local companies and hire local Guyana workers. There’s enough opportunity for everyone to make money, said Nicholas Deygoo, president of the Chamber of Commerce and Industry in Guyana’s capital city, Georgetown.

Deepwater potential

“The energy is really positive,” Deygoo said. “We’re going to see a lot more business between your city here in Houston and with our country.”

Nearly half of the Guyana population lives in the greater Georgetown area. Most of the country is unpopulated, occupied by dense rain forests, savannahs and mountains. But it’s Guyana’s deepwater oil potential that’s attracting all the attention.

Guyana is a smaller, poorer nation with stark divides between wealth and poverty. Per capita gross domestic product was abut $8,000 in 2017, compared to about $60,000 in the United States, according to the CIA’s World Factbook.

Thursday’s Guyana conference will feature energy services companies ranging from Houston-based Tidewater, which operates a fleet of offshore services vessels, to the world’s largest services firm, Schlumberger, which has a principal office in Houston.

Last week, Exxon Mobil announced it is authorizing the $6 billion second phase of its massive Guyana development.

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With the Liza Phase 2 project now approved — the first phase is what’s coming online in early 2020 — Exxon Mobil now expects to produce more than 750,000 barrels of oil a day offshore of Guyana by 2025. That’s equal to nearly 20 percent of Exxon’s global oil and gas production today.

The developments are in what’s known as the Stabroek Block, a potentially prolific oil field spanning 6.6 million acres. Stabroek was the name of Georgetown prior to 1812, when the British changed the name after taking control from the Dutch, who were the first colonizers of Guyana. The country gained its independence from the United Kingdom in 1966 and became a republic in 1970.

“With the government of Guyana and our partners, Exxon Mobil is bringing industry-leading upstream capabilities to build upon Phase 1 and further develop the shared value of Guyana’s resources,” said Liam Mallon, president of Exxon upstream oil and gas.

Political challenges

Exxon Mobil said it aims to keep its good will intact. But as in many developing countries, the company needs to navigate political challenges.

Guyana is dealing a recent vote of no confidence in the country’s president and prime minister by its parliament, called the National Assembly. The matter is playing out in courts.

Government officials and business leaders in Guyana are optimistic those internal political complications won’t hamper the growth. That’s where visits to Houston are expected to help.

“I think we’re off to a really excellent start,” Verwey said.

jordan.blum@chron.comtwitter.com/jdblum23