The Washington Post tells a story that sheds considerable light on Rex Tillerson, former CEO of ExxonMobil. The story begins in Venezuela, where ExxonMobil and other oil companies had long done business.
Socialist ruler Hugo Chavez needed cash to shore up his failing economy, so he demanded that all foreign oil companies give his government a bigger cut of their revenues. All the companies went along, except ExxonMobil, where Tillerson had recently become CEO. He refused Chavez’s demand.
Chavez responded by nationalizing ExxonMobil’s considerable assets in the country, which the company valued at $10 billion. The losses were a big blow to Tillerson, who reportedly took the seizure as a personal affront.
Only Tillerson didn’t get mad, at least in public. He got even.
Guyana, one of the poorest countries in South America, adjoins Venezuela to the East. ExxonMobil got rights to explore for oil off Guyana’s coast, and in May 2015, the company made a stunning announcement:
In the deep blue waters 120 miles off Guyana’s coast, the company scored a major oil discovery: as much as 1.4 billion barrels of high-quality crude. Tillerson told company shareholders the well, Liza-1, was the largest oil find anywhere in the world that year.
For tiny Guyana (population 800,000), the continent’s only English-speaking country and one of its poorest, it was a fortune-changing event, certain to mark a “before and after” in a country long isolated by language and geography.
The only problem was that Venezuela claimed Guyana’s waters and asserted a right to any oil recovered there. Venezuela’s claims are weak, but they had been enough to deter oil companies from partnering with Guyana to extract the oil:
The Stabroek block where ExxonMobil and its partners struck oil is off the coast of a patch of wild South American jungle known as the Essequibo territory. Venezuela and Guyana have haggled over it with oscillating levels of vehemence for more than 100 years. Amounting to two-thirds of Guyana’s surface area, it is, by any practical measure, a part of Guyana and populated by Guyanese people, albeit sparsely.
But Venezuelan claims on the land have long kept foreign investors out. In 2013, a research vessel exploring the area for U.S.-based Anadarko was intercepted by a Venezuelan warship, which temporarily detained the 36-member crew. It was a warning to other companies thinking of partnering with Guyana. Tillerson’s ExxonMobil went ahead anyway.
Venezuela threatened war, but apparently no one was impressed.
Maduro ordered military exercises along the border, appealed to the United Nations to intervene, and cast his country as a victim of “imperialist” aggression.
But Maduro was boxed in. Tillerson had taken him to school. And he was just getting warmed up. The company has moved quickly to drill more wells since then, racking up new discoveries in the area.
Other Caribbean nations have supported Guyana’s claims, further isolating rapidly-collapsing Venezuela. The President of Guyana, David Granger, now presides over the Caribbean Community group, CARICOM. ExxonMobil is about to get lots of oil, and Guyana will soon get lots of money. Venezuela will get nothing.
I like this guy Tillerson. Someone should think about nominating him as Secretary of State!