The South American country of Guyana has issued its first oil and gas license to ExxonMobil, which has said it made "significant" oil discoveries off the Atlantic coast.
Resources Minister Raphael Trotman said late Thursday that the company and its partners, Hess Guyana Exploration Ltd. and CNOOC Nexen, also received an environmental permit and can now drill in an area believed to contain at least two billion barrels of oil.
Oil extraction is expected to start in 2020 at an initial rate of 100,000 barrels per day, Trotman said. ExxonMobil will obtain a royalty of 2 percent on gross earnings and 50 percent of profits, while the government of Guyana has estimated it could receive up to $5 billion a year in revenue.
The oil will be stored in a massive floating platform under construction since the field is more than 100 miles (160 kilometers) offshore.
ExxonMobil has drilled more than half a dozen wells since 2015 and only one has come up dry, a discovery that has attracted dozens of other oil companies to Guyana.
London-based Tullow Oil and Toronto-based Eco (Atlantic) Oil & Gas said this month that they will start surveying concessions by late June and expect to drill a first well in 2018. Several other companies including Spanish-owned Repsol and Mid Atlantic Oil and Gas also are exploring the area.
ExxonMobil's discovery also reignited a decades-old border dispute between Guyana and neighboring Venezuela, which has rejected planned development of oil fields because they are allegedly in waters claimed by both countries. The United Nations will send the matter to the World Court by year's end if the two countries cannot resolve their dispute.
The U.S. Geological Survey had long estimated that offshore Guyana was rich in gas and oil, and the tiny country of 750,000 people hopes to receive enough of a windfall to provide free education and supply households with free cooking gas and cheap gasoline. The government also has said it would invest in its military and build a 350-mile (565-kilometer) jungle road from the capital of Georgetown to northeastern Brazil, opening up Guyana's rugged, mineral-rich interior.
Guyana currently relies on products like gold, rice sugar, bauxite and timber.
To prepare for a potential surge in oil production, Guyana is updating legislation to address potential spills and other issues and has sent professionals overseas to qualify as petroleum attorneys and engineers.