Portion of Stabroek Block to be relinquished is nothing material - Hess Boss

Portion of Stabroek Block to be relinquished is nothing material – Hess Boss

Jun 25, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Though ExxonMobil Corporation and its partners were required to surrender 20 percent of the Stabroek Block in October 2023, they have been able to secure a one year extension from the government. They argued that their exploration plans were affected by unforeseen COVID-19 delays in 2020, and as such, should be given back the lost time via an extension. Their claim is not an unreasonable one as it is catered for under the force majeure provisions in the Stabroek Block Production Sharing Agreement (PSA).

The deal notes in that regard that the oil companies can seek relief if their operations are affected by circumstances that are unforeseen such as a disaster or a pandemic.

Vice President, Dr. Bharrat Jagdeo also confirmed on Thursday that the companies will get one more year to keep the entire concession since authorities agree that the companies’ exploration plans were severely affected by the pandemic.

With the extension granted, he said the next stage of talks pertains to what portion of the block would be returned to the state.

The extension of ExxonMobil’s hold on the concession was also raised by Hess Corporation whose Chief Executive Officer, John Hess, participated in a separate conference Thursday too.

He noted that the partners will get more time to explore the block since they experienced setbacks during the height of COVID-19 in 2020z

The CEO said, “During COVID we really had a force majeure period because Exxon couldn’t even get workers in the country. We couldn’t run three rigs for exploration. So we took that exploration drilling pause…”

Over the next 12 to 24 months, Hess said the partners will be lengthening their search for oil into the northwest section of the block. He said much of the attention as well as the discoveries made have concentrated in the southeast portion.

Hess also noted that the partners plan to drill 10 to 12 exploration appraisal wells. The CEO said, “We don’t want to leave any well behind. It’s not in the interest of the government and it’s not in the interest of our shareholders or the joint venture.”

With respect to the portion of the block to be relinquished next year, he said the partners are pretty much ready for this. “We pretty much already have identified the 20% acreage that we would relinquish and it’s nothing material and nothing prospective. So we’re ready for that relinquishment. Whenever that time is,” he said.

Overall, the CEO said the partners look forward to continuing to working with the Government of Guyana and to realize the remarkable potential of Guyana’s world class resources for the benefit of all stakeholders. He said, “The world will need these vital oil resources to meet future energy demand and help ensure an affordable, just and secure energy transition.”

With respect to the projects in the Stabroek Block, the Liza Phase 1 and Liza Phase 2 developments produce an average of 380, 000 gross barrels of oil per day.

The third sanctioned development on the Stabroek Block, Payara, is targeted for start-up early in the fourth quarter, with a gross production capacity of approximately 220,000 barrels of oil per day.

The fourth sanctioned development, Yellowtail, is expected to come online in 2025 with a gross production capacity of approximately 250,000 barrels of oil per day.

The fifth project called Uaru will have a production capacity of approximately 250,000 gross barrels of oil per day with production targeted to start-up in 2026.

A sixth development, Whiptail, is expected to be submitted for government and regulatory approval later this year.

In total, the Stabroek Block partners have a line of sight to six floating, production, storage and offloading (FPSOs) with a gross production capacity of more than 1.2 million barrels of oil per day by the end of 2027. They have also said there is potential for up to 10 FPSOs to develop the estimated gross discovered recoverable resources of more than 11 billion barrels of oil equivalent.

The Stabroek Block is 6.6 million acres. ExxonMobil affiliate, Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.