ExxonM was required to relinquish another 20% of Canje Block since March 2022

Aug 30, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) was expected to relinquish 20 percent of the Canje Block since March, 2022 as per the relinquishment provisions in the agreement governing that block.

In the oil and gas sector, “relinquishment” refers to the process where a company returns a portion of an area it was allowed to explore or produce oil and gas. That process is also governed by specific timelines. Relinquishment, according to several pieces of literature, is also considered critical for governments as they can auction those returned portions to other oil companies, thereby channelling more opportunities for revenues to the State.

Back in 2019, Exxon and its partners which included Total S.A, Mid Atlantic Oil and Gas, and JHI Associates Inc. were required to give up 20 percent of the Canje block which at that time spanned 6100 km2. This relinquishment was in keeping with its agreement signed in March 2015 with Guyanese authorities.

A map showing the location of the Kaieteur, Canje and Stabroek Blocks that are operated by EEPGL as well as the 14 oil blocks part of Guyana’s maiden auction

That contract outlined that Exxon would be allowed to explore the block for 10 years which would be split into three phases. In the first phase lasting four years, Exxon was allowed to conduct seismic surveys. At the end of that period it was required to return 20 percent of the block to Guyanese regulators. Exxon relinquished 1,220km2, thereby reducing the block to 4880km2.

The contract also states that after the relinquishment, and a renewal of its licence, Exxon would advance to the second stage lasting three years. During that time, Exxon drilled three wells (Jabillo-1, Bulletwood-1, Sapote-1), none of which yielded a commercial discovery.

Chart showing the portions of offshore acerage to be returned by Exxon

The end of its second phase of having the licence to explore should have occurred in 2022. Once that relinquishment occurs, Exxon would be able to apply for its final three years to explore for oil, thereby bringing a close to its 10-year-lease. That 20% that is owed to the government, amounts to 976km2.

Notably, Exxon operates two other blocks offshore Guyana. For the Kaieteur Block, the agreement states that 25 percent should have been relinquished in 2019 and another 20 percent given up in 2022. The total portion to be relinquished would be equivalent to approximately 5414km2.

Over in the Stabroek Block spanning 26,800km2, Guyana’s most lucrative offshore concession with over 33 discoveries, Exxon has to relinquish 20 percent of it next year.

In total, Exxon has to return 11,750km2 in highly prospective offshore acreage to the State. This is nearly half of the total acreage for the 14 oil blocks that are part of the country’s maiden auction. Guyana has up for grabs, 11 shallow water blocks and three deepwater blocks spanning 26,478km2. These are expected to be awarded in the fourth quarter of 2023.