For immediate release to all media houses. Georgetown, Guyana,

December 19, 2022

PRESS STATEMENT

FIRST OIL AND THE START OF GUYANA’S METEORIC ECONOMIC GROWTH

December 20, 2019 – First Oil and the Start of Guyana’s Meteoric Economic Growth In 2019, December 20 was declared National Petroleum Day to mark the commencement of oil production in Guyana. There is a story there that was decades in the making, which could have never been told.

In May 2015, when ExxonMobil and its partners announced it had found commercial quantities of crude offshore Guyana, the news seemed surreal. For so many years, Guyanese had believed there was oil to be found, as the country’s coast is located in the same maritime region as the oil-producing states of Venezuela, Suriname and Trinidad and Tobago.

If the 2015 announcement by the oil major was surreal, more so was December 20, 2019, when Guyana announced it would start pumping her first one million barrels of crude.

As Liam Mallon, Exxon’s Upstream President said at a reception to mark First Oil,

“If we had met average industry performance, we would have been celebrating this event in 2024.” Those remarks are testimony to the herculean efforts made by the APNU+AFC Government and its oil partners to bring the new industry on stream in record-breaking time. Not everyone believed it was possible, and some, even urged that the timing be slowed down and delayed. However, both the Ministry of Natural Resources, and then, the Department of Energy, pushed to fulfil President Granger’s request for there to be

‘First Oil’ by 2020.

The issuing of a production license in July, 2017, Guyana’s first, put us on a non- returnable path towards early production. With that licence in place, time-lines became locked in and certain. In what was viewed as one of the fastest discovery-to-production projects in the global petroleum world, Guyana was to begin oil production in just about four years, defying the industry average of nine years.

While ExxonMobil and its partners had decades of experience in oil production, Guyana was like a newborn babe and the government at the time was in a Bolt-like sprint to catch up. Relying on global partners such as the World Bank, Chatam House, and oil- producing countries such as Mexico, USA, Canada, Trinidad and Tobago and others, there was a flurry of activities, meetings and back and forth emails and discussions to get to the start line.

Three FPSOs were to be procured; the Lisa Destiny, named as a tribute to the ultimate realisation of Guyana’s long-awaited wealth; Lisa Unity, an indication of where we were to head as a nation with the newfound wealth, and Lisa Prosperity, signalling Guyanese new and emerging state of being in a united and stable oil economy.

By the time the first barrel of crude was ready to be pumped, the coalition government had drafted and passed some eleven pieces of legislation necessary to facilitate the

country’s oil industry. In 2017 Guyana applied for and was granted candidature to Extractive Industry Transparency Initiative (EITI), committing the country to globally promote open and accountable management of oil, gas and mineral resources. In 2019, the Natural Resource Fund was created to manage the resource wealth and also save some for rainy days and future generations

Simultaneously, there was a massive effort to build local capacity. In March 2017, the Mexican Institute of Petroleum (IMP) and Guyana’s Ministry of Natural Resources started the execution of an MOU focused on three white papers: (1) an energy production/energy consumption matrix; (2) a catalogue of international best practices in oil and gas regulation: and (3) a human resources strategy. Following the IMP, two other international partners formalized MOUs with Trinidad and Tobago in September 2018 and the Canadian province of Newfoundland and Labrador in October of the same year.

It was not only legislation that needed to be passed, but new trade mechanisms also had to be addressed. Accordingly, in September 2019, the Trade Facilitation Roadmap

2019-2024 was launched to remove administrative delays for goods entering and leaving Guyana. As a result, processing time was to be reduced by 50 percent by 2020, and transaction costs reduced by 20 percent.

By 2018, the list of major oil companies that hold rights to develop oil resources of maritime blocks included Total, Tullow Oil, and EcoAtlantic in the Orinduik block.

During the same period, oil rights were held by Repsol and Tullow Oil in the Kanuku block;

Anadarko in the Roraima block; Ratio Oil in the Kaieteur block; Esso, MidAtlantic and JHI

in the Canje block; and CGX in the Demerara and Corentyne blocks.

By 2019 ExxonMobil had made ten discoveries: the Liza-1, Liza-2 (Liza Deep), Payara, Snoek, Turbot, Ranger, Pacora, Longtail, Hammerhead and Pluma test wells. Estimates then had put potential reserves above five billion barrels of oil for the Stabroek block alone, making Guyana, at the time, one of the top five oil powerhouses in the Western Hemisphere.

While many criticize the production-sharing agreement that brought Guyana into the oil- producing world, a 2019 online article by TOTALTEC, and quoting a Wall Street Journal article, noted that Guyana would go from one of Latin America’s poorest countries, second only to Bolivia, to one of its wealthiest. It described the economic growth as ‘seismic’.

The article also noted that the 2016 Production Sharing Agreement between Exxon and Guyana was first negotiated in 1999. The 2016 agreement had improved terms, although many still believe Guyana got the the short end of stick. Therefore, notice must be taken of circumstances that prevailed when the PSA with Exxon and its partners was signed.

For example, immediately following the announcement by Exxon in 2015 that it had found oil in Guyana, Venezuela issued a Presidential Decree restricting the area where oil was seen as part of its offshore zone. This was not a threat to be taken lightly as many would recall that in 2013 Venezuela’s navy had boarded and seized the RV Teknik Perdana that was carrying seismic surveys offshore Guyana.

However, Venezuela’s threat was not viewed as sable rattling, and the coalition government made the bold and historic decision to have a judicial settlement of the border controversy before the Internal Court of Justice. The Exxon signing bonus would make this possible.

By December 2019 and First Oil, Exxon had made 15 discoveries offshore, and Guyana’s economy was on a fast upward trajectory. While the global Covid 19 pandemic was taking its toll on other economies, Guyana was one of the few countries worldwide that saw economic growth during those difficult years. This was due to the coalition government’s fast work and endless toil that brought Guyana from zero to an oil producing state in less than four years. With 15 discoveries by first oil, Guyana’s future can be bright but careful management of earned revenue will be needed.

The future will tell!

End.