[LINK] "Exxon’s Guyana Oil Discovery May Be 12 Times Larger Than Economy"

[rfmcdonald]

Bloomberg's Andrew Rosati and Joe Carroll report about the discovery of massive oil deposits offshore of Guyana. Besides noting that this might provide an explanation for Venezuela's renewed claims, I think I'm right to fear for the consequences of massive oil deposits on the life of a poor country. Right?

An Exxon Mobil Corp. discovery in the Atlantic Ocean off Guyana may hold oil and natural gas riches 12 times more valuable than the nation’s entire economic output.

The Liza-1 well, which probably holds the equivalent of more than 700 million barrels of oil, may begin producing crude by the end of the decade, Raphael Trotman, the South American country’s minister of governance, said in an interview Monday. The prospect would be on par with a recent Exxon find at the Hadrian formation in the Gulf of Mexico, and would be worth about $40 billion at today’s international crude price.

Guyana produces no oil and its gross domestic product of $3.23 billion in 2014 ranked between Burundi and Swaziland, according to the World Bank. Exxon, which has a market value of $341 billion, has declined to provide an estimate for Liza-1 since describing the discovery as “significant” in a May 20 statement.

“A find of this magnitude for a country like ours, which sits on the lower end of the scale of countries in this hemisphere, this could be transformational,” Trotman said. “From my sense, from speaking to experts outside of Exxon, it has to be something in excess of 700 million barrels.”

Exxon, which began drilling the well in March, said it found a 295-foot (90-meter) column of oil- and gas-soaked rock in a subsea region known as Stabroek Block. The well is 120 miles (193 kilometers) offshore and 5,710 feet beneath the sea surface.