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Exxon ‘iffy’ about bidding for new oil blocks
– waiting on economic terms to decide on participation
Kaieteur News – There have been different views about the participation of oil giant, ExxonMobil in the country’s first offshore bid round set for the end of this year, but it appears that the company too is undecided as to whether it will seek more oil blocks during the competitive bid exercise.
Guyana’s offshore blocks
In fact, information from international media, Reuters is that the oil company will not be making a decision on its participation until it sees the fiscal terms attached. A comment from an Exxon insiders said that the company “is uncertain whether it will bid for new offshore areas Guyana wants to explore.” The insider told the international media that the petroleum powerhouse is also waiting for the economic terms to be known before deciding on whether it wants to expand on its current acreage. In response to questions regarding the company’s interest in the upcoming bid round, spokesperson Meghan Macdonald was reported as saying that Exxon is seeking cost effective investments. “Exxon continues to evaluate a wide range of global exploration opportunities, focusing our investments in advantaged assets with a low cost of supply,” she told news agency.
While there have been calls to not have Exxon included in the bid round, Vice President Bharrat Jagdeo had said that to exclude Exxon and other international oil companies, could reduce the competitiveness of the process. The argument as to whether international oil companies will dominate the process also came with the risk of monopolization. But the Vice President had pointed to the other side of the discussion where reducing the number of bidders could cause the exercise to be less competitive; with lower bids.
Already enjoying the richness of Guyana’s 6.6 million acre Stabroek oil block, the Alliance For Change (AFC) had submitted that the US oil major should not be allowed to participate in the year end auction of the remaining blocks. Opposition spokesperson on oil and gas David Patterson had told the National Assembly during an address last month that Exxon already holds more of Guyana’s wealth than it should. He contended that Guyanese should be allowed to participate, and should also be the winning bidder of the prospective oil blocks, considering the fact that locals will have enough time to boost their human resource capacity and financial strength. Acknowledging the oil giant’s experience in the sector, Patterson noted that if ExxonMobil wishes to participate, it could play a partner role and lend its expertise to the local business.
“There is nothing wrong with Exxon partnering afterwards if they want to lend their expertise to a local company but I don’t think that it is advantageous for us to have more than 50 or 60 percent of our oil fields controlled by one particular company,” Patterson had submitted.
President Irfaan Ali had also said last month that his administration is still looking at the business model to allow a strategic partner to operate and manage the country’s potential oil company ahead of the upcoming oil block auction. The President had explained that since the announcement of the specific model of oil company, several expressions of interest have been received by the government and one of the models he believes will benefit Guyana is one in which some oil blocks can be developed through a state company; “one in which the Government does not have management interest nor does not play any part in managing, nor do we put any investment in but where Guyanese people are part of what comes out of the returns.”
The government is still crafting its new Production Sharing Agreement and is set on providing better terms to allow a larger financial take for the country. Vice President Jagdeo is adamant that while there will be no change to the current PSA for the Stabroek Block where Exxon and partners have found some 11billion barrels of crude, the new agreement will seek more for the country, the government oil and gas point person said.
The oil block auction is expected in the last quarter of this year after a cancellation of the September date. The auction is also expected to take place with existing data sets rather than fresh seismic studies. Jagdeo had said that, the market is good now and that oil prices is high, “I think now is the right time if we go to the auction… should we go, using the current data set, not generating future data sets.” .
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