In a surprise decision last month, ExxonMobil had signed over its share of the Kaieteur Block to its partners and left the block. According to the company, however, the block still has much potential and leaving it is not a reflection of its value.
At the time ExxonMobil had announced that it had left the Kaieteur Block offshore Guyana, it had handed over its interest to Israeli oil company Ratio. Explaining that decision during a recent press conference, Exxon Guyana President Alistair Routledge said that the company was faced with a drill or drop decision.
“Our decision there was that we were faced with a drill or drop decision on the farm in we had with the other owners in the block. And as we looked at that decision and the timing in which we would have had to make the commitment, it did not compete with the other decisions at a corporate level, that we could see,” Routledge explained.
Routledge made it clear, however, that the block still has a lot of potential for Ratio and its partners to pursue. And while they are walking away from it, he said that the block has been sufficiently de-risked by their work in it.
“So, it’s really a question of global portfolio management. It’s not that we dislike the block. We put a great deal of investment into it. Obviously, we’re walking away from that. We also feel that we’ve opened it up enough to the current owners and potentially others they may bring, to move forward with the exploration that right now we can’t support.”
ExxonMobil was previously the operator of Kaieteur Block with a 35 per cent working interest while Hess held 20 per cent, Cataleya 20 per cent and Ratio 25 per cent. With both Exxon and Hess withdrawing from the licence, Ratio and Cataleya are expected to retain a 50 per cent participating interest each.
At the beginning of 2021, the partnership had announced the Tanager-1 discovery in the Kaieteur Block offshore Guyana, with proven reserves of 65 million barrels of oil. In addition to Tanager-1, it was previously reported that there was the prospect of additional oil mapped across a 5750 sq km 3D seismic survey. It is located in the southern part of the Kaieteur Block, where the joint venture partners are grading the next potential targets for drilling.
The Kaieteur Petroleum Agreement is currently in the first extension period, which began on February 2, 2021, and lasts for three years. It was revealed a couple months ago that former President David Granger had granted a one-year extension to ExxonMobil on its 2016 prospecting licence – a move which has shifted the oil major’s relinquishment timeline.
In the letter, dated July 24, 2020, the then Head of State approved extensions for Exxon’s holdings in the Stabroek, Canje, and Kaieteur Blocks. Based on provisions in that 2016 agreement, when the second renewal period comes up, the licence holder would have to relinquish 20 per cent of the block.
Guyana, with ExxonMobil as the operator, began producing oil on December 20, 2019, in the oil-rich Stabroek Block, which is 6.6 million acres (26,800 square kilometres).
ExxonMobil, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
