ExxonMobil in Guyana: Can the Nation Balance Economic Growth and Climate Change Issues?
Case Code: ECON102
Case Length: 14 Pages
Pub Date: 2022
Teaching Note: Available
Organization : ExxonMobil
Industry : Energy
Countries : Guyana
Themes: Government & Economy, International Trade,Government Policies,Corporate Responsibility
Abstract Case Intro 1 Case Intro 2 Excerpts
The case study focuses on the challenges small developing nations face in dealing with large multi-national corporations. It deliberates upon the importance of framing and implementing robust economic policies that balance issues relating to the climate crisis and the country’s economy.
The case briefly describes the Guyanese economy and the earlier governments’ push to support oil exploration in the region. It then details the entry of ExxonMobil into Guyana and how the oil company entered into a production licence agreement with the Guyanese government with the promise to boost the national economy.
The case also looks at how the first oil discovery in May 2015 suddenly led to the small nation becoming the epicenter of the oil industry. This led to a flare up of century old border disputes between Venezuela and Guyana related to claims on the offshore oil discovery. The case then touches upon how the development of oil fields exposed Guyana’s people and its economy not only to the climate impacts of greater fossil fuel combustion but to the profound risk of tying the country’s future development to oil at a moment when the industry faced critical and inevitable decline.
The case finally looks at the government’s attempt to set up new regulations as a result of the need for transparency on the production licensing agreements with ExxonMobil and the first climate change constitutional case filed by Guyanese citizens to restrain ExxonMobil’s plans to further explore and increase fossil fuel production off the country’s coast. Responding to charges that the expansion of ExxonMobil’s operations in Guyana violated citizens’ constitutional right to a healthy environment and the rights of future generations, the Guyanese government introduced the local content policies that prioritized Guyanese nationals and companies in the procurement of some goods and services.
Amidst these developments, what remained to be seen was whether the tiny nation could walk the tightrope between the opportunity of a lifetime to build an oil-based economy and pursuing a policy beyond oil that would set the stage for a stronger and vibrant nation for years to come.
The case is structured to achieve the following teaching objectives:
- Become aware of the need to balance economic growth with climate change issues.
- Examine the role of the state in economic development.
- Understand the need for having robust policies for economic development.
- Explore how small nations are short-changed by global corporations.
- Understand the characteristics of an oil economy.
Exxon Mobil: A Background Note
Exxonmobil in Guyana
The License Agreement and Subsequent Issues
The Government’s Attempt to Set Up New Regulations
Economic Growth; Energy Economics; Oil Economy; Analyzing country and currency risk; International Trade; Absolute and Comparative advantage
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