US Investment Bank Believes Political Uncertainty in Guyana Won’t Hurt Oil Development Plans

Despite the political uncertainty in Guyana, pending the Caribbean Court of Justice (CCJ) ruling on whether the no-confidence vote passed against the government in December last year was valid, US multinational investment bank Morgan Stanley believes that the country’s oil development plans remain on track.

And it said rumours of investigations into corruption in the award of oil blocks should not affect the plans either.

Morgan Stanley’s position was outlined in an article by OilNOW online news, which stated that the potential for new elections and the investigation rumours were discussed at a meeting last week with Jay Wilson, VP of Investor Relations at Hess Corporation.

The bank said investors have been concerned that the political uncertainty – over whether the CCJ will rule the no-confidence motion was invalid or rule that it was valid and order fresh elections – may result in the government changing the production sharing contract terms or delaying approval of additional development.

However, it noted: “The recently announced Final Investment Decision for Phase 2 of development occurred despite this political uncertainty and included no changes to the production sharing contract or royalty regime.”

Morgan Stanley said it believes that regardless of the CCJ decision and the outcome of the next elections, there is no near-term risk to the production sharing contact, since both political parties have stated support for the existing contract with co-venturers ExxonMobil, Hess and CNOOC Nexen Petroleum Guyana Limited.