Exxon Mobil Corp. has taken the initial steps towards launching its seventh oil project in Guyana, indicating its intention to significantly expand crude production from the South American nation into the next decade.
The Hammerhead project is set to produce up to 180,000 barrels per day (bpd) by 2029, pending approval from the Guyanese government, according to Exxon’s country manager Alistair Routledge. On Monday, Exxon submitted an environmental authorization application for this investment, which is expected to increase Guyana’s overall production capacity to nearly 1.5 million bpd, comparable to that of OPEC member Nigeria.
This multi-billion-dollar investment underscores Exxon’s commitment to Guyana, a sparsely populated South American nation. Exxon’s ambitious plans have already positioned Guyana as the third-fastest growing oil-producing country outside of OPEC in recent years, making it a significant contributor to global oil supplies.
Guyana has played a crucial role in Exxon’s post-pandemic stock resurgence due to its highly profitable crude, which has a break-even cost of less than $35 per barrel. The Hammerhead project will have a capacity approximately 30% lower than Exxon’s three previous offshore installations, making it the smallest since the first Guyana project commenced production in 2019. The floating production, storage, and offloading vessel (FPSO) for Hammerhead has been specifically designed to meet the target oil field’s needs. This downsized vessel does not indicate diminishing resources in the region.
“It’s the right solution for the particular resource in this part of the block,” Routledge explained. “For other resources, we again expect some larger facilities.”
If approved by mid-2025, Hammerhead will continue Exxon’s pattern of bringing a new project online in Guyana roughly every 18 months. “The goal we’re working to is to maintain that cadence,” Routledge stated. “We think the resource is there. We obviously want to ensure we optimize the development within the block.”
Exxon first discovered oil in Guyana’s Stabroek block in 2015 and has since made over 30 major discoveries, amounting to more than 11 billion barrels of recoverable reserves. Exxon operates the block and holds a 45% stake, while Hess Corp. and China’s Cnooc Ltd. own the remaining 30% and 25%, respectively.
Currently, Exxon is in arbitration with Chevron over its proposed acquisition of Hess, which is largely motivated by Hess’s non-operating stake in Guyana. Exxon claims it has a right of first refusal over the stake. Chevron and Hess, however, argue that their deal is structured as a corporate merger, thus nullifying the right.