Govt wants ExxonMobil’s Stabroek Block relinquishments to be in next auction

The content originally appeared on: INews Guyana
The Stabroek Block

Even as the Guyana Government is currently in the process of negotiating potential oil contracts from its first licensing round, consideration is already being given to the next oil block auction.

Vice President Dr Bharrat Jagdeo said on Thursday that Government will have to conduct an internal survey to gather all the date available relating to the oil and gas sector, specifically the licensees operating and the various oil blocks offshore Guyana, with the aim of having them consolidated in preparation for the next auction.

Asked about the timeline for its second licensing round, Jagdeo told reporters at a press conference that while he does not want to make any commitments, it “could be [this year].”

The Vice President explained the importance of developing the country’s petroleum resources in a timely manner in light of the global shift from fossil fuel to cleaner energy sources. On this note, he said Government will have to first consult with its advisors on moving ahead.

“We’re also going to talk to our advisors to see what’s happening in the world of [oil blocks] auction and what’s the right timing, because they’re more in tune to what’s happening globally, and we have to fit any auction that we may pursue in that context,” he stated.

However, while Government will be seeking guidance on the way forward, VP Jagdeo pointed out that Government would ideally want the next licensing round to include United States oil major ExxonMobil’s 20 per cent relinquishment from the oil-rich Stabroek Block to be included in that auction.

“The relinquishment of the Stabroek block — which we’re hoping would be part of the next auction — will happen, I think, in October; so we have to examine whether, outside of the Stabroek Block, we can sustain another auction with the properties we have now. And since that (relinquishment) will happen in October, [we can] then leave that for the next auction, or wait until those properties come back to the State, and then go out with an auction including those properties. So, these are things that we have to decide on,” Jagdeo stated.

The 2016 oil contract for the Stabroek Block, signed between ExxonMobil and the previous APNU/AFC Government, stipulates the relinquishment of 20 per cent of its acreage in the Stabroek block not held by discoveries. This relinquishment was due last year, but the US oil giant secured a one-year extension, until October 2024, after the force majeure was applied during the COVID-19 pandemic that resulted in lost time.

Force majeure is a French legal term meaning the occurrence of circumstances beyond control, preventing the fulfilment of a contract.

Jagdeo had, since last year, indicated Government’s intention to put the relinquished areas back on the market. He had said the 20 per cent acreage that would be relinquished had already been identified, and that it is nothing material in the oil-rich Stabroek Block, which is estimated to have over 11 billion oil-equivalent barrels, and where production activities have been ongoing since December 2019.

Currently, there are three floating, production, offloading and storage (FPSO) vessels being operated by Exxon and its partners – Hess Corporation and CNOOC – producing ‘light sweet’ crude in the Stabroek Block.

Government has reported that some 142.9 million barrels of oil were produced in 2023 from the Liza Destiny, Liza Unity, and more recently the Prosperity FPSO, which can on stream last November. These three FPSOs in the Stabroek Block are projected to realise production of over 550,000 barrels of crude oil per day in 2024, with an expected ramp up to over 600,000 daily in the latter part of this year.

Contract negotiationsHowever, even before the Guyana Government moves ahead with a second auction of its oil blocks, VP Jagdeo said on Thursday, it first has to complete ongoing process with the bidders from last year’s licensing round.

“They have a deadline of I think the end of this month to submit some additional information. Thereafter, we should decide whether the agreements are going be signed up or not. So, we need to conclude that,” the Vice President has said.

The bidding round which was launched in December 2022 closed off in September 2023 with six companies bidding on eight of the 14 blocks offshore that were up for grabs. In total, there were 14 offers made on those blocks – two deep-sea blocks and six shallow-area blocks.

Among those awarded oil blocks during the bid round was a Guyanese female-led company, Sispro Inc., which received a shallow block (S3) and a deep-water block (D2). Other shallow blocks were awarded to: Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia), which got Block S4; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited, which got Block S7; and International Group Investment Inc of Nigeria, which got two blocks – S5 and S10.

Another shallow block, S8, was awarded to the Stabroek Block partners: ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited.

The second deep-water block – D1 – was awarded to Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.Natural Resources Minister Vickram Bharrat had said in November that the six companies and groups had already indicated their readiness to start exploration work and cover the cost of the signing bonuses every new oil company must pay – US$10 million for shallow water and US$20 million for deep water.