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Exxon in race to unlock another 10 billion barrels of oil before giving up 20% of acreage in 2026
Kaieteur News – Having unlocked 11 billion barrels of oil equivalent resources in the Stabroek Block, ExxonMobil Corporation has a better understanding of where the sweet spots lie. So improved is its knowledge of the block that the American oil company has said on several occasions that the resource found could be doubled. The big question is: Will it have enough time to do it?
This multi-billion dollar question recently raised its head during the 2022 fourth-quarter earnings for Hess Corporation. Its shareholders wanted to know the game plan for doubling the resource before having to relinquish a portion of the block in three years’ time.
Chief Executive Officer, John Hess acknowledged that Exxon and its partners are well aware that they do not have all the time in the world. He was keen to note that the partners still see multibillion barrels of exploration potential remaining on the block.
Map showing the location of the Stabroek block
Hess said, “We are still in the early innings of defining the deeper potential, but there is definitely multibillion barrels potential remaining. And to get after that, that’s why ExxonMobil is doing an excellent job developing this block. It has a six-rig programme. Three of them are for development activities and three really are for exploration and appraisal.”
Hess added, “So, we are going to continue to have a very active exploration appraisal programme this year and future years to make sure we capture all the high-value resources that we think are on the block.”
Shareholders then challenged Hess to say definitively if there is enough time to unlock the resource or if an extension would be secured to allow for further exploration works to continue.
Hess was keen to note that there is no extension in play. He said, “The reason we are doing the exploration and appraisal programme is to get ahead of that to make sure we capture all the resources that we can, and we work closely with our joint venture led by ExxonMobil and the government to do that.”
Since 2016, industry stakeholders have criticized the relinquishment provisions in the Stabroek Block which they posited, are lopsided and not in keeping with industry standards.
Attorney-at-Law and Chartered Accountant, Christopher Ram in a previous interview with Kaieteur News had pointed out that both the Coalition and the People’s Progressive Party Civic (PPP/C) Governments utilised a loophole in the Petroleum Act that allows the minister to alter the size of a block to be relinquished. As a result of this, he said Exxon only has to relinquish 20 percent of the block instead of 75 percent in normal situations.
He was keen to note that the first person to utilise this loophole was Janet Jagan in the 1999 Pre-discovery Agreement which was then made worse under the 2012 model Agreement produced during the time of former President, Donald Ramotar and former Natural Resources Minister, Robert Persaud.
But, the Chartered Accountant reserved his disgust for the David Granger regime which had renegotiated the agreement in 2016 and did nothing to correct this flaw.
Ram had expressed the fear that with little oversight and undisclosed arrangements between ExxonMobil and the Government, the block can be subject to any form of machination via production licences.
In the meantime, ExxonMobil and its joint venture partners are pushing for more explorations licences so that by the time the first relinquishment is due, the 20% to be given up would be of a considerably reduced portion of the Stabroek Block.
To date, ExxonMobil has made over 32 discoveries in the Stabroek Block. Ten more are planned for this year.
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