ExxonMobil still to surrender 45% of Kaieteur Block

Jun 12, 2022 News

One year later…

By Kiana Wilburg

Kaieteur News – When one considers amendments made to the Petroleum Prospecting Agreement for the Kaieteur Block, it is clear that ExxonMobil’s affiliate, Esso Exploration and Production Guyana (EEPGL), is more than one year late on the relinquishment of 45 percent of the highly prospective offshore concession.
The Kaieteur Block, which spans 13,500 km2, holds a gross, estimated prospective resource of 2.1 billion barrels of crude. To grasp a better understanding of the size of the block, it is bigger than the size of three of the founding members of CARICOM: Jamaica (10,991 km²), Trinidad and Tobago (5,131 km²), and Barbados (431 km²).
The massive offshore concession was awarded back in April 2015 to Cataleya Energy Corporation (CEC) which was formerly Ratio Energy Limited and Ratio Guyana Limited, a subsidiary of Ratio Petroleum Energy Limited Partnership headquartered in Israel (Ratio Petroleum).
Subsequent to the Upper Cretaceous play-opening at the Liza-One discovery in May 2015, a farm-in agreement executed with ExxonMobil, along with various other arrangements, saw the effective date of the Kaieteur Petroleum Agreement being amended from April 2015 to February 2017.
With this in mind, it should be noted that a prospecting licence in the oil sector is up for renewal after four years. During that period, the company has to adhere to a work programme, and at the conclusion of same, it can elect to relinquish all or a portion of the block.
The PSA, when perused by Kaieteur News, notes at Article Four, which deals with Exploration Programme and Expenditure Obligation that the Contractor shall carry out a series of minimum work commitments.
The agreement notes that the initial period of four years shall be divided into two phases, each, having a duration of 24 months.
In the first phase, the contractor shall acquire all available 2D seismic data from previous surveys conducted over the Contract Area, process and/or reprocess as necessary, and interpret same. At the end of phase one of the initial period, the Contractor shall either elect to relinquish the entire Contract Area, or relinquish 25 percent of the Contract Area and commit to the work programme in phase two.
During phase two of the initial period, the Contractor shall conduct a survey to acquire a minimum one thousand (1,000) line kilometres of new marine 2D seismic and/or five hundred square kilometers (500 sq. 1cm) of new 3D seismic over the Contract Area, process, and interpret same.
At the end of the initial period of four years, EEPGL can elect either to relinquish the entire contract area or relinquish 20 percent of the block, save and except for any discovery made and renew the Petroleum Prospecting Licence for a further period of three years.
It, therefore, means that at the end of the first four years, that is to say, in February 2021, ExxonMobil should have handed over to the State, 45 percent of the Kaieteur Block.
The Kaieteur Block is currently operated by ExxonMobil’s subsidiary, Esso Production and Exploration Guyana Limited, in partnership with CEL, Ratio Guyana Limited and a subsidiary of Hess Corporation.
The partners are already planning to drill 12 wells this year and are awaiting the blessings of the nation’s Environmental Protection Agency to move ahead.