WEBVTT - Bloomberg Surveillance: Exxonmobil Development President Liam Mallon

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Let's turn to the energy sector. A little bit of

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<v Speaker 2>tension in the energy sector, Venezuelan President Nicola Maduro threatening

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<v Speaker 2>to bar Exon Mobil from expanding in Guyana. The oil

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<v Speaker 2>giant is looking to grow development in the South American

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<v Speaker 2>countries offshore reserves, expecting crude outpert to hit one point

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<v Speaker 2>two million barrels a day by twenty twenty eight. Venezuela

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<v Speaker 2>has continued to make territorial claims about the region, stretching

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<v Speaker 2>back to colonial types. Joining us to discuss Exon's big

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<v Speaker 2>opportunity in the region is Liam Mallett, the president of

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<v Speaker 2>Exon Mobil. Upstream from the Guyana Energy Conference, Liam, wonderful

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<v Speaker 2>to catch up with you, sir. I want to go

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<v Speaker 2>back something like ten years and start in late spring,

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<v Speaker 2>I think May of twenty fifteen when this discovery was

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<v Speaker 2>first made by you and a team at Exon. Liam,

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<v Speaker 2>Since then, can you give us some size and scope

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<v Speaker 2>just how big the opportunity is in this part of

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<v Speaker 2>the world.

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<v Speaker 3>Yeah, Jonathan, thanks for the time, and good morning to everyone. Firstly,

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<v Speaker 3>I think Jonathan, just a little bit of context. You know,

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<v Speaker 3>this energy concept, energy demand continuing to grow as the

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<v Speaker 3>world's population grows, and we continue to focus on lifting

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<v Speaker 3>people out of poverty, and oil and gas a fundamental

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<v Speaker 3>component of that mix, and from our perspective, that will

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<v Speaker 3>also continue to grow, but very importantly, at the same

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<v Speaker 3>time as we continue to grow, it lower and lower

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<v Speaker 3>the emissions intensity of that oil and gas. And nowhere, Jonathan,

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<v Speaker 3>a greater example than right here in Guyana. You know,

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<v Speaker 3>this is this is a deep water you know, this

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<v Speaker 3>is technology play at the extreme out of two and

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<v Speaker 3>a half thousand meters of water, and we've been extraordinarily

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<v Speaker 3>successful in a very short time. You think about you know,

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<v Speaker 3>today we're producing over six hundred thousand barrels a day.

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<v Speaker 3>That's gone from zero to six hundred thousand barrels in

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<v Speaker 3>four years. And the average development time from when we

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<v Speaker 3>discover a well to actually bringing it online and putting

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<v Speaker 3>that oil in the market is less than five years.

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<v Speaker 3>That's about half the industry average. So you know, this

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<v Speaker 3>is a is a country that blessed with fantastic rocks,

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<v Speaker 3>the rocks that produce the oil. You know, a great partnership,

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<v Speaker 3>great supportive government policies. We're doing it with lower emissions.

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<v Speaker 3>We're spreading the benefits across the country. Is it is

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<v Speaker 3>the kind of success, the kind of opportunity that comes

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<v Speaker 3>along pretty rarely in a lifetime.

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<v Speaker 2>Elam, Do you expect this to become the top producing

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<v Speaker 2>country for exon outside of the United States pretty soon?

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<v Speaker 3>Well, I mean it's certainly right now. It's in our

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<v Speaker 3>top three deep water developments around the world, and you know,

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<v Speaker 3>at the pace that we're continuing to grow, Jonathan, you know,

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<v Speaker 3>over the next couple of years, it'll be right up

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<v Speaker 3>there with the Permian in terms of the actual magnitude

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<v Speaker 3>of the production. So very competitive, very exciting, and importantly

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<v Speaker 3>doing it with leading emissions intensity.

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<v Speaker 1>There's a real question about some of these security concerns,

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<v Speaker 1>given the fact that there have been some serious threats

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<v Speaker 1>from venez vel Esmaduro talking about your exploration of the region.

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<v Speaker 1>What kind of discussions do you have with the United

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<v Speaker 1>States to ensure that your contract really gets enforced and

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<v Speaker 1>you're able to produce the amount of oil that you

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<v Speaker 1>would like.

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<v Speaker 3>Yeah, Well, you know, we're staying very focus. We've been

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<v Speaker 3>very clear, we're staying very focused on executing our operations

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<v Speaker 3>within our defined contract area. That's what we've been doing.

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<v Speaker 3>That's what we intend to continue to do. And you know,

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<v Speaker 3>as we talked about, this development has many years ahead

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<v Speaker 3>of it and we're not going anywhere. So you know,

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<v Speaker 3>fundamentally we're we're delivering and we're developing, and we're continuing

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<v Speaker 3>to spread the benefits to Gana within our area of operations.

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<v Speaker 3>You know, the matter for discussion with the borders is

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<v Speaker 3>really a government matter of course. You know, we take

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<v Speaker 3>the necessary precautions from an operational perspective, you know, to

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<v Speaker 3>the extent we can. But fundamentally, our focus on is

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<v Speaker 3>on doing what we say we're going to do, doing

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<v Speaker 3>that within our approved contract area, and continuing to do that.

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<v Speaker 1>And that's the reason why we're talking about this is

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<v Speaker 1>because Venezuela's president was talking about barring you from exploring

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<v Speaker 1>and war waters in particular that it was talking about

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<v Speaker 1>near Guyana, right off the coast that it claims is

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<v Speaker 1>its own. Are you planning on exploring those areas? Is

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<v Speaker 1>this a point of contention that you're talking to the

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<v Speaker 1>State Department or is that not in your purview? And

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<v Speaker 1>you can continue with the production that you have planned

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<v Speaker 1>without that.

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<v Speaker 3>Those those wells that got discussed are in our contract area,

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<v Speaker 3>and we do plan on proceeding with them here in

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<v Speaker 3>the coming years.

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<v Speaker 1>But are you.

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<v Speaker 4>Concerned about Guyana's ability to defend itself. It's not just

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<v Speaker 4>the rhetoric from Nicholas Maduro, it's the fact that we

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<v Speaker 4>have seen in satellite imagery him building up his own

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<v Speaker 4>military on the border.

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<v Speaker 3>You know, again, that's honestly a matter for the governments. Clearly,

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<v Speaker 3>you know, given the nature of operations, were informed as

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<v Speaker 3>to the nature of those discussions. We've been pleased with

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<v Speaker 3>the discussions. We're very supportive of Ghana's position that this

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<v Speaker 3>should be resolved through the j process and will continue

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<v Speaker 3>to stay engaged with them.

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<v Speaker 2>Elliam. One thing that you mentioned one of the conversation

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<v Speaker 2>is the technology required to explore these deposits.

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<v Speaker 3>Liam.

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<v Speaker 2>I think that's really interesting because if you go back

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<v Speaker 2>to I think it was twenty eighteen when THEIMF basically

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<v Speaker 2>came out and said the terms of the twenty sixteen

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<v Speaker 2>deal between Exon and the government and Guyana was too

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<v Speaker 2>favorable towards Exon, that the royalty share wasn't faithorfble enough

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<v Speaker 2>for the government. Do you think the current situation actually

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<v Speaker 2>to go back in time, say four or five six years,

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<v Speaker 2>the current situation justifies that existing agreement absolutely.

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<v Speaker 3>You know, this is a risk reward business and you

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<v Speaker 3>know this was a front you said it yourself, Jonathan,

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<v Speaker 3>this was less than twenty fifteen nine years ago. This

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<v Speaker 3>was a frontier, deepest water in the world type proposition

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<v Speaker 3>that only companies with our kind of technology capabilities, are

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<v Speaker 3>financial capabilities could take on. And the contract was appropriate

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<v Speaker 3>for that risk. And as we've continued to explore, you know,

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<v Speaker 3>we are successful parts of the block, we are not

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<v Speaker 3>successful in other parts of the block. So this remains

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<v Speaker 3>a frontier area that is still very early in its

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<v Speaker 3>expiration and its development stage. So this type of risk

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<v Speaker 3>reward is very appropriate for the nature of what we're

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<v Speaker 3>doing here in Ghana.

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<v Speaker 2>Liam, you've talked about developments like this helping countries like

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<v Speaker 2>Guyana get out of poverty certain elements of the West,

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<v Speaker 2>and you've seen this from policymaker after policymaker, government after

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<v Speaker 2>government want to phase out fossil fuels before Guyana and

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<v Speaker 2>countries like Ghana have had the opportunity to develop the

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<v Speaker 2>opportunity in front of them. Now, Liam, I just wondered

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<v Speaker 2>your thoughts on that and clearly as an oil producer yourself,

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<v Speaker 2>you're going to have to talk to your book a

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<v Speaker 2>little bit. But Liam, I do wonder what the government's

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<v Speaker 2>been telling you about that. Do they have to do

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<v Speaker 2>this quickly? Are they worried about how fast the timeline

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<v Speaker 2>they've actually got to explore and develop this?

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<v Speaker 3>Yeah, I think it's the mixed question Jonathan. Again, you know,

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<v Speaker 3>first of all, we are developing these resources with industry

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<v Speaker 3>leading emissions in tensity. Secondly, you know, we will be

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<v Speaker 3>providing natural gas here. I think as you probably know,

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<v Speaker 3>to uh supply domestic onshore power generation here in the

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<v Speaker 3>next in the next year or so, this will get

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<v Speaker 3>up and running. That in itself will half the electricity

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<v Speaker 3>costs to the people of Ghana and comes with significantly

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<v Speaker 3>lower emissions than the alternative, which is important fuel oil.

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<v Speaker 3>So there is a whole value chain expansion potential from

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<v Speaker 3>low emissions offshore oil to bringing gas into the domestic

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<v Speaker 3>market and beyond, feeding a much lower carbon future for

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<v Speaker 3>this country and allowing the country to grow and expand

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<v Speaker 3>and spread those benefits into society at large using gas

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<v Speaker 3>as a low emissions source of energy and potentially other

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<v Speaker 3>you know, alternative energies as the economy grows. But you know,

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<v Speaker 3>the whole, the whole ability to get started and grow

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<v Speaker 3>significantly and take gas and fundamentally transform the economy in

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<v Speaker 3>a lower carbon way is right in front of our eyes.

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<v Speaker 3>And it's something that the government of Guhana has been

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<v Speaker 3>very clear about in their gas development. Liam.

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<v Speaker 2>We'll speak to President Ali a little bit later this morning.

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<v Speaker 2>I think we catch out with him from that conference

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<v Speaker 2>in about forty five minutes time. Big question that we've

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<v Speaker 2>been asking in trying to find out the ultimate answer too,

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<v Speaker 2>is when we can expect a final investment decision to

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<v Speaker 2>proceed with a sixth offshore or development in Guyana. Liam,

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<v Speaker 2>how close are we to that decision now?

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<v Speaker 3>I will let you confirm this with President Ali, of course,

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<v Speaker 3>but we're expected to see that in the first quarter

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<v Speaker 3>of this year.

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<v Speaker 2>Is that still the timeline?

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<v Speaker 3>Yes?

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<v Speaker 2>Okay, Liam, appreciate your rimpo this morning. Thank you, sir,

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<v Speaker 2>Liam Mannon of Exmmobile