Oil giant, as big as Petrobras, almost gives up on discovery worth more than 5 trillion reais in Guyana

Imagine being on the verge of a discovery that could change the destiny of an entire country, but facing deep doubts and almost giving up. This is the story of an Exxon Mobil geoscientist who, looking out across the vast Atlantic off the coast of Guyana, saw potential where others only saw risk.

What he didn't know, however, was that this bet almost didn't happen, and what is now one of the biggest oil discoveries of a generation, could have remained at the bottom of the ocean, forgotten and untouched.

Exxon Mobil, the oil giant, was one step away from giving up on exploration, which ended up revealing a reserve of more than 11 billion barrels of oil in Guyana.

This discovery not only transformed Exxon, but also changed Guyana's economic landscape, making it one of the largest producers of oil per person in the world. The field, called Liza, is today one of the company's most valuable jewels, but its exploration faced resistance and doubts within the company itself.

A geoscientist's risky bet

In 2013, Scott Dyksterhuis, a young geoscientist at Exxon Mobil, firmly believed in the possibility of a vast reserve of oil hidden nearly three miles beneath the seabed off the coast of Guyana.

Despite Dyksterhuis' certainty, Exxon had drilled more than 40 dry wells in the region, and the unfavorable track record made the project an extremely risky bet.

Drilling the Liza well, the name given to the geological formation in the area, would cost around US$175 million and had only a 20% chance of success, according to estimates by the geoscientist himself.

The discovery, if confirmed, could prove a theory that suggested Venezuela's oil-rich geology extended to the northern coast of South America. But many within Exxon and the oil industry in general were unwilling to take that risk.

From doubt to success: Guyana transforms itself

The scenario changed drastically with the discovery of the Liza formation, which turned out to be a priceless treasure. Exxon Mobil not only proved geological theories, but also turned Guyana into one of the world's leading oil producers.

In 2027, the country is expected to surpass Venezuela and become second largest oil producer in South America, second only to Brazil. The discovery of oil in Guyana elevated the country, previously one of the poorest in the region, to the status of an energy giant, with per capita production projections exceeding those of Saudi Arabia and Kuwait.

Today, Guyana is the cornerstone of Exxon’s post-pandemic renaissance. With a 45% stake in the Liza field, where the production cost is less than US$35 per barrel, Exxon has managed to turn the discovery into one of the most profitable projects outside the Organization of Petroleum Exporting Countries (OPEC).

Even with the current oil price of around US$80 per barrel, the Liza field remains profitable, ensuring profits for the company, even in the face of uncertainties regarding the future demand for fossil fuels.

The energy transition dilemma and environmental criticism

The story of the discovery of oil in Guyana reveals challenges for the global energy transition. Although many in the industry expected renewable energy, such as solar and wind, to gradually replace oil, Exxon bet on staying away from fossil fuels, resulting in a significant financial return. Since the start of production in Guyana in 2019, Exxon shares have more than doubled, recording the highest return among the global oil majors.

Moreover, The discovery in Guyana also brought significant criticism, especially from environmentalists concerned about the environmental impact. Melinda Janki, a Guyanese lawyer specializing in environmental protection, harshly criticized Exxon, accusing the company of polluting the ocean and atmosphere without bearing the consequences of the damage caused. According to her, “Exxon is polluting the ocean and the atmosphere without having to pay for the damage.” Exxon, in turn, claims that it invests in technologies to protect the environment and that it meets or exceeds regulatory requirements.

The Competitors That Quit and Exxon's Lessons

While Exxon reaped the rewards of its persistence, other major oil companies that had given up on the region were bitterly regretful. Companies such as Chevron and Shell, which initially had a stake in Guyana's exploration blocks, chose to abandon the venture. Chevron, for example, recently paid $53 billion for Hess, one of Exxon's Guyana partners, in an attempt to make up for lost time.

Guyana's story, however, goes beyond a simple successful bet. It demonstrates how Exxon, in addition to being an oil giant, also stood out as a financial engineering company. By hedging its bets, Exxon minimized risk and maximized profits, turning a high-risk project into one of its greatest assets.

Behind the scenes of the decision: how they almost gave up

In 2013, the drilling of the Liza well was about to be cancelled. Exxon's top geoscientists concluded that the risks were not worth the investment, and the company could lose the Stabroek block concession if it did not begin exploration.

That's when Rudy Dismuke, a business consultant, proposed a bold solution: drill for free. A small group of low- and mid-level Exxon employees found a way to make the project viable, reducing costs as much as possible and ensuring continued exploration.

The concession obtained by Exxon also played a crucial role in this story. Thanks to the work of Rod Limbert, the company was able to negotiate a highly favorable agreement with the government of Guyana, guaranteeing 50% of the profit after deducting costs, in addition to a royalty of just 1%. Although Guyana was criticized for accepting such a generous contract for Exxon, the deal was vital to the country's economy as well as strengthening Guyana's position in territorial disputes with Suriname and Venezuela.

An Exxon bet that transformed a country

The story of the discovery of oil in Guyana is a lesson in how Calculated risks can lead to extraordinary rewards. The Liza field, which was almost abandoned by Exxon, is now one of the pillars of Guyana's economy and Exxon itself. This journey shows that, in a sector as uncertain as oil, persistence and courage can be the keys to transforming a dubious project into a monumental success.

Will Exxon's bet on Guyana and its resistance to rapid energy transition prove visionary or disastrous in the long term?