India can cash-in on relinquished portion of Stabroek Block

Mar 01, 2023 News

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…as Gov’t considers offering India acreage outside auction

By Davina Bagot

Kaieteur News – ExxonMobil and its partners- Hess and CNOOC- will soon be required to give back to the State 20 percent of the lucrative Stabroek Block, where in excess of 11 billion barrels of oil has already been discovered.

This relinquished portion, which was unexplored by the operator, will not be auctioned but in fact will be secured by the State for bilateral agreements. Vice President Bharrat Jagdeo who is presently in India made the revelation, hinting that the South Asian state may very well benefit from a portion of the prolific oil block.

According to a report from Indian news agency- Livemint, the two countries will in fact be signing a Memorandum of Understanding (MoU) for cooperation in the oil and gas sector. The report, which was shared by Jagdeo on his Facebook page was also confirmed by local state media entity, the Department of Public Information (DPI) which reported Jagdeo as saying, “We also explored the possibility of India examining the abundant resources that we’ve had outside of those (oil blocks) that are on auction now.”

Presently, 14 of the nation’s resource sweet spots are on auction, comprising some 11 shallow areas and three in the deep water zone. It is the rich Stabroek Block however, that India may be able explore. According to Jagdeo, “Next year, ExxonMobil will have to give up 20% of their holdings. So, all of those will be available for some form of bilateral engagement, where we can actually see joint production or exploration-related activities.”

In an interview with the Indian press on Friday, the VP said Guyana is ready to sign the MoU to boost cooperation in the petroleum sector and is awaiting the approval from India’s Cabinet. The former Head of State said, “We don’t want India’s involvement only in defining our gas policy, but also from an investment perspective to develop those resources.”

It was reported that Guyana is looking to recruit skilled workers from India to help develop the local gas sector.  President Irfaan Ali along with a high-level team were in India for a seven-day trip recently and entered into several new agreements with the Indian state for collaboration in other sectors, inclusive of manufacturing and power generation among others. It is the VP however, who manages the petroleum sector that will be handling those arrangements.

President Ali had met with India’s Minister of Petroleum and Natural Gas and Housing and Urban Affairs, Shri Hardeep S Puri in Delhi, India, where the leaders discussed “direct Government-to-Government cooperation across the oil and gas spectrum, including increased long-term offtake, participation in exploration and production activities in Guyana, technical cooperation in the midstream and downstream sectors and capacity building, as well as the synergies which exist between the two countries,” a release from the Head of State detailed. It was also noted that the two countries have agreed to set up technical teams to advance these discussions. Reuters reported that Ali when asked if Guyana would offer blocks to Indian companies through direct negotiations said, “Apart from the auction, we are discussing Government-to-Government partnership in a number of areas including exploration.”

In the meantime, Opposition party Alliance For Change (AFC) has signalled its support for the move by government to engage in bilateral agreements for its oil blocks. The deals brokered however, according to the party leader, Khemraj Ramjattan must be made public. According to him, “there should not be any secrecy … about it, it should be open and that is my position at this point.”

He was keen to note that the Opposition will be looking forward, at the very least, for the details regarding such arrangements to be shared in the National Assembly.

For several years, this newspaper has been at the forefront of calls for there to be a thorough, independent investigation into the award of two blocks – Kaieteur and Canje – since several industry stakeholders who examined the matter, concluded that they were awarded under suspicious circumstances. The Canje Block for instance was awarded by the Donald Ramotar administration on March 4, 2015, days before that year’s General and Regional Elections, to a local company, Mid-Atlantic Oil and Gas. Similarly, the Kaieteur Block was awarded on April 28, 2015, just two weeks before the elections, and like the Canje Block, it was done based on the advice of former Minister of Natural Resources, Robert Persaud.

Successive Governments of Guyana have come under heavy criticisms for their management of the country’s nascent oil and gas sector. From the giving away of oil blocks to the signing of a lopsided contract with ExxonMobil, citizens do not feel they will ever benefit fully from the resources. One significant area that has come under scrutiny is the awarding of oil blocks – something which industry experts said should have been put on a public auction in the first place. It took the country more than seven years after it discovered oil, to move towards its first auction.

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• agreements, bilateral, India, Oil blocks, Stabroek

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