Latest update November 21st, 2024 1:00 AM
‘I bet my career on Guyana’ – former Hess Executive
Kaieteur News – Former Hess Vice President of Exploration for Guyana and Suriname, Tim Chisholm, had bet his entire career on Guyana’s Stabroek Block.
Former Hess Vice President of Exploration for Guyana and Suriname, Tim Chisholm
This is according to a Bloomberg article, “The untold story of how Exxon scored a US$1 trillion oil bonanza that 30 rivals passed up” by Kevin Crowley.
It was reported that Chisholm studied Venezuela for Exxon in the 1990s, and Pablo Eisner had worked in the region for Repsol SA. The pair wanted a slice of Stabroek, but when that was not an option, they led Apache into Suriname instead. Before they could drill a well, Apache management had a change of heart and cut its exploration team. Chisholm and Eisner were laid off within a half-hour of each other. Chisholm went to Hess and Eisner joined CNOOC. Each says they believed they had unfinished business.
After negotiating a sweetheart deal for the Stabroek Block before oil was discovered, ExxonMobil quickly set up a data room at its Greenspoint office in Houston, inviting about 30 oil companies. With only about 20 showed up, geoscientists from each interested party got a daylong presentation from the Exxon team and a second day to analyze the data.
Hess was the last to come through. Chisholm grilled Exxon’s team for more than two hours. “(They) did a very good job of, I would say, not overselling it,” Chisholm said in a 2020 lecture. “That was very critical to me believing. (They) had passion for what it was.”
In mid-2014, Hess was considering entering the block, after Shell dropped a bombshell and wanted out after six years of paying for seismic data. The decision was “part of a broader groupwide review of our frontier exploration portfolio,” the company said in response to questions.
Shell’s decision left Exxon owning 100% of Stabroek and only weeks before it had to inform the Guyana government whether or not it planned to drill. Within Hess, Guyana was a tough sell, but the company agreed to take a 30% stake. “I bet my career on it,” Chisholm said, adding, “I would have definitely been fired if it had not worked.” Notably, today, the Stabroek Block is now producing over 600,000 barrels of oil per day from just three projects ( Liza Phase 1, Liza Phase 2 and Payara). Exxon controls the block that holds 11 billion barrels of recoverable oil, worth nearly US$1 trillion at current prices.
Moreover, Eisner, who had coveted Guyana since working with Chisholm at Apache, was now working at CNOOC.
“Everybody was offered Stabroek, but you need a maverick, big-headed geologist banging the table, even breaking the table to say, ‘This is good,’ ” he says. “At CNOOC, that was me.” Eisner convinced his bosses, and CNOOC took a 25% stake.
Exxon’s (ExxonMobil Guyana Limited) share of Stabroek was now 45%, but crucially, the two newcomers agreed to fund most of the well cost. With Exxon’s own money now largely protected, management gave the go-ahead to drill Liza.
By 2015, the oil companies discovered oil and the following year signed what is now known as the heavily criticized lopsided deal which benefits the oil companies more than the country. The Production Sharing Agreement (PSA) for the Stabroek Block was signed in 2016 by former Minister of Natural Resources, Raphael Trotman, who served under the APNU + AFC Coalition government.
The 2016 deal gives Guyana an industry-low 2% royalty. Presently, Guyana shares revenue with ExxonMobil after the company deducts 75 percent towards the costs incurred to develop the resources in the Stabroek Block. This arrangement, with the lack of ring-fencing, sees Guyana paying for projects that are yet to begin production activities.
Each month bills from future producing developments are added to the list of expenses to be cost recovered by Exxon. After the 75 percent is deducted to pay back the oil company, Guyana then shares 50/50 of the 25 percent remaining with Exxon as profits. This amounts to 12.5 percent of profits from the operations.
- CNOOC, Former Hess Vice President of Exploration for Guyana and Suriname, management, Pablo Eisner, Tim Chisholm
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