Kaieteur, Canje oil blocks still with Exxon

Sep 27, 2024 News

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– company still to provide info to finalise exit from Kaieteur, to leave Canje by 2026- Jagdeo says

Vice President (VP) Bharrat Jagdeo on Thursday said that ExxonMobil is yet to provide all the information government requested before it formally grants approcval for the oil major to exit the Kaieteur Block.

Jagdeo was responding to an article carried by this publication where Exxon had said that they were awaiting the approval from the government to formally exit the block having already transferred their operatorship to Ratio. However, Jagdeo speaking at his news conference said that the government is awaiting the company to provide 16 pieces of information requested to complete the review and allow the company to leave.

Jagdeo said prior to his press conference, he reached out to the Ministry of Natural Resources for some clarity on the matter and was sent a copy of the letter written to Exxon’s country Manager for Guyana Alistair Routledge requesting the additional information. Part of the letter to the oil company from the ministry read: “Reference is made to your company’s application received on October 20, 2023 requesting approval for the transfer of interest in the Kaieteur Block Petroleum Exploration License and the subsequent submission of additional documents on the 25^th of January 2024. Please be guided that further thorough review of the submitted documents the Ministry of Natural Resources has found that some additional information is needed prior to closing out this process this information is detailed in the attached list for your submission.” Jagdeo said ExxonMobil is yet to submit the additional information. “Instead, it appears that they are trying to let it seems like the government is holding up their exit, “Jagdeo told the news conference.

Meghan MacDonald, Media and Communications Supervisor for ExxonMobil had told this publication in an invited comment recently 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.”

On September 30, 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 Kaieteur Block was awarded on April 28, 2015 by then President Donald Ramotar, just two weeks before the general elections that year before it was sold to ExxonMobil. It was done based on the advice of former Minister of Natural Resources, Robert Persaud, Ramotar had said. The award of the oil block to the company 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.

Still with Exxon

Meanwhile, Jagdeo also told the news conference that it was brought to his attention by a reporter that he may have not been clear when addressing the issue of the Canje Block and its current status. He clarified that the block has not been repossessed by the government but rather there have been relinquishments. “Well first 20 %, 25% and then they had the force majeure. So soon in fact that should have been done by now and then by 2026, I think the Canje Block that will be back with the government should there be no progress on announcing a development,” he explained. 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. The company then sold the block to ExxonMobil. 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 licences while adding that this is important for transparency and taxation purposes.

 

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• Canje, exit, Exxon, Jagdeo, Kaieteur

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