Guyana issues first oil, gas license

GEORGETOWN, Guyana — The South American country of Guyana has issued its first oil and gas license to Exxon Mobil, which has said it made “significant” oil discoveries off the Atlantic coast.

Resources Minister Raphael Trotman said late Thursday that the company and its partners, Hess Guyana Exploration Ltd. and CNOOC Nexen, also received an environmental permit and can now drill in an area believed to contain at least two billion barrels of oil.

Oil extraction is expected to start in 2020 at an initial rate of 100,000 barrels per day, Trotman said. Exxon Mobil will obtain a royalty of 2 percent on gross earnings and 50 percent of profits, while the government of Guyana has estimated it could receive up to $5 billion a year in revenue.

The oil will be stored in a floating platform under construction since the field is more than 100 miles offshore.

Exxon Mobil has drilled more than a half-dozen wells since 2015 and only one has come up dry, a discovery that has attracted dozens of other oil companies to Guyana.

London-based Tullow Oil and Toronto-based Eco (Atlantic) Oil & Gas said this month that they will start surveying concessions by late June and expect to drill a first well in 2018. Several other companies including Spanish-owned Repsol and Mid Atlantic Oil and Gas also are exploring the area.

To prepare for a surge in oil production, Guyana is updating legislation to address potential spills and other issues and has sent professionals overseas to qualify as petroleum attorneys and engineers.