ExxonMobil in Guyana: Can the Nation Balance Economic Growth and Climate Change Issues?
| Case Code: ECON102 Case Length: 14 Pages Period: 1966-2022 Pub Date: 2022 Teaching Note: Available |
Price: Rs.400 Organization : ExxonMobil Industry : Energy Countries : Guyana Themes: Government & Economy, International Trade,Government Policies,Corporate Responsibility |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Guyana’s Economy
The economy of Guyana had not always been prosperous. The country achieved independence on May 26, 1966 and for many decades after, it remained a typical colonial economy dependent on agricultural and mined products, particularly sugarcane and bauxite. Economic reforms were passed under a socialist-leaning government in the late 1960s but this did not have any major impact on the economic cycle..
Exxonmobil in Guyana
ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), was one of the first to begin exploring the 6.6-million acre Stabroek Block. It safely drilled offshore wells up to 5,512 meters in depth in 2,030 meters of water. Seismic data, geological analysis, and well results showed multiple oil discoveries. The very first world-class discovery in May 2015 was made in the Liza field by ExxonMobil..
The License Agreement and Subsequent Issues
On June 15, 2017, Guyana’s government collaborated with ExxonMobil with the signing of a production license for the extraction of oil and natural gas. Getting into oil production was a complex game, particularly for a country like Guyana. “The discovery of oil can be both a blessing and a curse to the nations that inherit it. Even countries with impeccable macroeconomic management and good governance face challenges when they start pumping oil..
The Government’s Attempt to Set Up New Regulations
In May 2021, two Guyanese citizens filed a constitutional case seeking a restraint on ExxonMobil’s plans to further explore and increase fossil fuel production off the country’s coast. They claimed that the expansion violated citizens’ constitutional rights to a healthy environment and the rights of future generations...
What next?
Big investment firms had taken a cautious and gradual approach when pushing companies to change. The large mutual funds that tracked stock indexes invested in big oil companies because they were included in indexes. In addition, a section of investors were reluctant to interfere too much in how businesses were run..
Exhibits
Exhibit I: Guyana’s GDP Growth
Exhibit II: Oil Discoveries by Exxon Mobil of Guyanese Coast
Exhibit III: Guyana: Projections On Cash Flow from Oil Production Operations
Exhibit IV: Case: Thomas & De Freitas Vs. Attorney-General of Guyana
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