Exxon says new drilling is ‘well south’ of Essequibo territory

(Bloomberg) Exxon Mobil Corp.’s exploratory drilling off the coast of Guyana will be “well south” of the disputed territory that Venezuela claims as its own, according to a senior company executive.

Venezuela’s maritime claim rests along a “projected” 70-degree line out to sea from Punta Playa on the border with Guyana, Alistair Routledge, president of Exxon operations in the country, said during an interview.

The Exxon executive’s comments come amid reports of a Venezuelan military buildup close to the disputed Essequibo region, which is fast becoming one of the Western Hemisphere’s major security concerns. Exxon has been accelerating development of massive oil discoveries off the Guyanese coast that are transforming the sparsely populated South American nation.

“Where we’re proposing to drill this year is well south of that 70-degree line,” he said. “There’s been no history of dispute or any recent history of Venezuela intervening with activity in that area.”

Exxon and Hess Corp., a minority partner in Guyanese drilling, declined more than 2% on Friday, putting them among the worst-performing oil stocks in the S&P 500.

Venezuela Defense Minister Vladimir Padrino this week pledged a “proportional, forceful and rightful response” if Exxon were to drill in any area the country considers its own. Venezuela is moving tanks and other military equipment to the border between the two countries, the Wall Street Journal reported Friday.

The seven wells Exxon plans to drill are at least 100 kilometers (62 miles) away from Venezuela’s claimed territory, Routledge said. Five are in the south-east portion of the Stabroek Block, closer to Suriname, while two are in the central section, he said.

“We recognize the government has signed an agreement with the Venezuelans not to antagonize the situation, and they want to resolve the issue in the ICJ which is the right venue,” Routledge said, referring to a case currently before the International Court of Justice.

In recent years, Exxon has drilled three wells closer to Venezuela than those planned for this year without any problems, Routledge said.

“We’re getting on with development and activity within acreage that is clearly Guyana’s territory,” he said. “It’s licensed to us to explore and develop. Where there’s controversy over the borders, that’s for the governments to resolve.”