Eight years after receiving 6.6M acres Stabroek Block ExxonMobil says will return 20% in October

May 06, 2024 News

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Kaieteur News – ExxonMobil Guyana Limited (EMGL) said it will return 20% of the Stabroek Block to the Government of Guyana (GoG) in October this year.

This was revealed by EMGL’s President, Alistair Routledge during a press conference last week at the company’s Duke Street, Kingston, Georgetown office. He told reporters, “That is scheduled to take place in October this year that is when the next prospecting license renewal takes place and at that point, we will relinquish acreage back to the government.”

The Exxon official noted that the company has not yet finalised the portion of the block that will be returned to the state but will work with the government on the calculation of what the 20% represents and the subsequent identification of the acreage to be relinquished. Exxon was required to return a portion of the Block to Guyana in 2023, however, former President, David Granger had granted the company an extension in 2020 to conduct further exploration activities.

According to documents released by the Ministry of Natural Resources, Granger signed an order giving Exxon a one-year grace period to hold in their entirety, the Stabroek, Canje and Corentyne Blocks. The three orders state that Granger was written to by Exxon’s Country Manager, Alistair Routledge on July 2, 2020, seeking a grace period given the COVID-19 pandemic and its impact on restricting the implementation of exploration for the three blocks.

The extension granted by the former Head of State one month before he demitted office, required the operator to provide proof that its work programme was indeed impacted. Despite fervent calls by Kaieteur News and members of civil society for the incumbent government to release documents proving that the company’s operations were impacted by the pandemic, Vice President Bharrat Jagdeo who manages the sector has refused to do so.

He said, “So they (Exxon) demonstrated how COVID affected them. It is the David Granger extension that therefore shifted the timeline to relinquish 20 percent of the block from 2023 to 2024 and that is the consequence we are living with.” When asked about sharing this evidence publicly, the VP said, “We don’t have to give evidence to AFC.”

The chief policymaker for the sector was also not inclined to make government’s reports on this matter public to ease tensions of other stakeholders. He said the fact of the matter is that an extension was granted and the government did not extend it.

According to the 2016 Production Sharing Agreement (PSA) between the GoG and ExxonMobil, the Petroleum Prospecting License was granted for an initial period of four years from the effective date of the contract. The Agreement also provided for no more than two renewals for up to three years each. Thereafter, the Contractor is required to relinquish 20% of the Contract Area to the government, excluding portions where discoveries have been made or areas where there are ongoing appraisal activities.

ExxonMobil holds a 45% interest in the Stabroek Block, while its co-venturers, Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.

Since 2015, Exxon has unlocked a total of 41 discoveries in the 26,800 square kilometers block, amounting to over 11 billion barrels of oil. The company has often bragged about the size of the block and the potential it holds for economic growth of the company and its shareholders.

Senior Vice President of ExxonMobil Corporation (XOM), Neil Chapman in March this year while appearing at the Morgan Stanley’s Energy and Power Conference in New York discussed the company’s strategy and its intent to push production to 1.2 million barrels of oil in Guyana by 2027.

Chapman said, “This is an enormous block and it’s actually quite phenomenal if you go down there. We have six drilling ships in the basin in pretty close proximity.” He pointed out that the Stabroek Block is in fact equivalent to more than 1,000 blocks in the Gulf of Mexico.

Notably, the contract signed with Exxon has been deemed the ‘worst’ oil deal by this government, but it has determined it will not seek a renegotiation. Citizens fear that due to the lack of ring-fencing and other key provisions such as the tax-free holidays granted to Exxon and its sub-contractors, Guyana will continue to collect a meager share of revenues from the sector well into the future.

The deal allows Exxon to deduct 75% of the monthly earnings to cover its investments. The remaining 25% is then shared equally with Guyana. This means Guyana receives 12.5% of the profits and 2% royalty as agreed in the contract.

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• oil, relinquishment, return

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