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Stabroek Block will go down as a successful deepwater oil development in history – Exxon CEO
ExxonMobil’s Chairman and Chief Executive Officer, Darren Woods
Kaieteur News – ExxonMobil’s Chairman and Chief Executive Officer Darren Woods on Friday described Guyana as one of the oil giant’s most strategically important assets and predicted that the country’s Stabroek Block will go down as one of the most successful deepwater developments ever recorded.
Speaking during the company’s second quarter earnings call, Woods highlighted that Exxon recently celebrated the 10th anniversary of its first oil discovery in Guyana and oil production commenced in December 2019. Currently, three Floating Production Storage and Offloading (FPSOs) the Liza Destiny, Liza Unity, and Prosperity are producing a combined total of about 650,000 barrels per day (bpd). Next week a fourth FPSO – One Guyana – is expected to commence oil production at the Yellowtail development increasing daily production to 900,000 bpd.
Woods noted that by 2030, the company anticipates having a total production capacity of 1.7 million barrels of oil equivalent per day across eight sanctioned projects in the Stabroek Block.
In addition to the Yellowtail project, Exxon has two other sanctioned projects under its belt: Uaru and Whiptail. It has also submitted an Environmental Impact Assessment (EIA) for its seventh project, Hammerhead, with production targeted for 2029. Additionally, the company has filed an application for an eighth development, Longtail.
“The success of these projects has established Guyana as the world’s fastest growing economy, it’s also one of the reasons I believe the Guyana development will prove to be one of the most successful deepwater developments of all time,” he said.
The Stabroek Block
ExxonMobil Guyana Limited (EMGL) is the operator of the Stabroek Block which spans 6.6 million acres. The block is estimated to hold 11.6 billion barrels of oil.
Exxon holds 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd. (now Chevron) holds 30 per cent interest, and CNOOC Petroleum Guyana Limited holds 25 per cent interest. The agreement governing the Stabroek Block extends favorable terms to the oil companies. According to the agreement, Stabroek Block partners can recover 75% of oil produced to cover investment costs. The remaining 25% is considered profit and is split equally between Guyana and the consortium, giving each 12.5%.
However, the consortium pays a 2% royalty from its share to Guyana. From Guyana’s 14.5% total take, the government must pay the oil companies’ taxes. The deal stipulates that the sum equivalent to the taxes owed by the companies must be paid by the Minister responsible for petroleum to the Commissioner General of the Guyana Revenue Authority (GRA).
Moreover, Woods also addressed the recent arbitration ruling which allowed Chevron’s US$53 billion acquisition of Hess to conclude, giving Chevron access to the Stabroek Block through Hess’ 30% stake in that block.
He admitted the outcome was unexpected and noted, “I admit the ruling was a surprise we were highly confident in our position and so was CNOOC, this dispute was about protecting our contractual rights… Having co-written the contract with Shell we understood its intent and believe the contractual language conveyed it, unfortunately the tribunal interpreted differently.”
Woods stressed the importance of contract sanctity in fostering investor confidence and reiterated that the tribunal’s decision does not change ExxonMobil’s plans for Guyana.
He added, “What disappointed we respect the process and the ruling, as we move forward, I hope our investors take comfort in the length we will go too to protecting the value our employees create for the company and our shareholders. With respect to the continuing development of Guyana the arbitration decision changes nothing for us and we welcome Chevron to the Stabroek Block.”
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