Exxon says awaiting Govt. approval to exit Kaieteur Block

Sep 26, 2024 News

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Kaieteur News – ExxonMobil Guyana has handed over operatorship of the Kaieteur Block to Ratio Guyana Limited however the company is still awaiting approval from the government to formally exit the oil field.

Meghan MacDonald, Media and Communications Supervisor for the company told this publication in an invited comment that, “We are still awaiting formal government approval to leave the block, however we have handed over operatorship to Ratio Guyana Ltd. Our participating interest is going to Ratio and Cataleya with Ratio assuming role of operator.”

She further stated that, “We do need government’s approval to formally exit the block not handover. I should also clarify we have been working with GoG and keeping them appraised throughout this process.”

Vice President Bharrat Jagdeo told reporters on Thursday last that “the Canje Block has reverted back to the government because they didn’t meet their obligations and the Kaieteur Block is now…there have been some exploration on it and we expect some determination in the future.”

On September 30^th 2023 this publication reported that the Government of Guyana has clearly stated that the proposed exit by ExxonMobil and Hess Corporation from the Kaieteur Block must be consistent with the country’s legal framework. ExxonMobil, which operates the Kaieteur Block with a 35% stake, and Hess, holding a 20% stake, have recently expressed to the government, their intent to divest their interests in this offshore oil asset.

The move would leave Ratio Guyana Limited and Cataleya Energy Limited as the principal stakeholders. But the Government of Guyana has emphasised the importance of due diligence and adherence to the law.

The Ministry of Natural Resources, in a statement, underlined that while it acknowledges the decisions by the oil giants, any process concerning a transition in the ownership of the Kaieteur Block must be in alignment with the recently enacted Petroleum Activities Act 2023. This legislation, along with its regulations and the Kaieteur Petroleum Agreement and its associated prospecting license, sets the parameters for such transitions. The recent Petroleum Activities Act has modernised Guyana’s oil and gas regulatory framework. This is the second such transfer of interests under the new framework, after Tullow’s exit from the Orinduik Block. The Ministry noted that once a formal application for the exit is received, it will be critically evaluated in accordance with the relevant legislation and regulatory tools. Notably, Ratio and Cataleya had held the Kaieteur Block before stakes were farmed out to Exxon and Hess.

The Canje Block 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, Ramotar had said. Two companies received the blocks with 50-50 stakes – Ratio Energy Limited (now Cataleya Energy Limited) and Ratio Guyana Limited. The award of the oil blocks to the companies was especially concerning since the ultra-deep drilling is required for those blocks, a technique which only a handful of companies in the world have the technology, track record, and capability to execute. The red flags which have manifested in both situations include that the awards were given to unqualified companies, that the initial owners quickly flipped the blocks without doing any work, that they are incorporated in ‘secrecy’ jurisdictions, and that Guyana likely lost revenue due to the avoidance of an open, competitive bidding process.

Ramotar had said that hundreds of files came to his desk every day to sign off, “and when the then Minister of Natural Resources, Robert Persaud brought the files of the Kaieteur and Canje oil blocks to his desk for his signature, he asked Robert if everything is okay with them, and Persaud told him yes sir, so he signed off the files.  It has been close to five years since the PPP/C Government has failed to honour its promise to release the beneficial owners of the oil blocks offshore which include but are not limited to the Kaieteur, Canje, Orinduik, Kanuku, Demerara, Corentyne, and Berbice concessions. The issue was first raised in November 2020 by Jagdeo, who holds an oversight responsibility for the oil and gas industry. Back then, he said that the government would seek to determine the beneficial owners of Guyana’s resources, with first priority being given to the owners of the nation’s oil blocks. Jagdeo had said that the government intends to have a greater understanding of the ownership structure of the companies with the said licenses while adding that this is important for transparency and taxation purposes.

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• Approval, company, Kaieteur Block, publication, Ratio Guyana Limited

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