The Guyana Government has commenced the process to facilitate United States oil major, ExxonMobil, relinquishing 20 per cent of the oil-rich Stabroek Block offshore Guyana.
This is according to Natural Resources Minister Vickram Bharrat, who disclosed during a recent mid-year press conference that the technical teams from his ministry have already started engaging ExxonMobil – which, along with its co-venturers, is operating the Stabroek Block – on the relinquishment to be done later this year.
“The [prospecting licence] renewal is up on the 7th of October for the Stabroek Block… So, our teams have already started working with Exxon to ensure that we work out the relinquishment of 20 per cent of the Stabroek Block,” Bharrat stated last week.
The 2016 oil contract for the Stabroek Block, signed between ExxonMobil and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration, stipulates the relinquishment of 20 per cent of the acreage in the Stabroek block not held by discoveries.
“So, it is not 20 per cent of the entire Stabroek Block… The relinquishment clause states that it excludes production areas [and] appraisal areas too. Those areas must be excluded. And then, you know, there is an area being affected because of the [border controversy] issue with Venezuela too. So, our team is working out the acreage that will remain after [those exclusions], and then 20 per cent (of) that will have to be relinquished, and (it) comes back to the state… So, that is on stream for October, when Exxon will seek a renewal [of the Stabroek Block prospecting licence],” the Natural Resources Minister explained.
Located approximately 120 miles offshore Guyana, the 6.6 million-acre Stabroek Block holds over 11.6 billion oil-equivalent barrels of light sweet crude. Production activities have been ongoing since December 2019, and exploration activities continue in the prolific block offshore Guyana. To date, over 30 oil discoveries have been made in the Stabroek Block, with the latest crude find recorded in March at the Bluefin well.
Currently, there are three floating, production, storage and offloading (FPSO) vessels – the Liza Destiny from the Liza Phase One Project, Liza Unity from the Liza Phase Two Project, and Prosperity from the Payara Project – producing oil offshore Guyana at a combined rate of just over 640,000 barrels per day.
Two other projects, the Yellowtail and Uaru, are expected to come on stream in 2025 and 2026 respectively, and would further ramp up the country’s production.
As the operator of the block, ExxonMobil’s local affiliate ExxonMobil Guyana Limited holds a majority 45 per cent interest, while Hess Guyana Exploration Ltd has 30 per cent interest, and CNOOC Petroleum Guyana Limited holds the remaining 25 per cent interest in the Stabroek Block.
These three FPSOs in the Stabroek Block are projected to realise crude oil production of over 550,000 barrels per day in 2024, with an expected ramp-up to over 600,000 in the latter part of this year.
Back in May, President of ExxonMobil Guyana, Alistair Routledge, told reporters during a press conference, “We have a good idea, but we haven’t finalised that. And obviously, we have to work with the Government on the calculation of what the 20 per cent represents; and then the identification of the acreage, and then the Government confirming that it is aligning with the obligations of the contract.”
This Stabroek Block relinquishment was due in 2023, but the US oil giant had secured a one-year extension, until October 2024, from the previous Coalition Government after the force majeure was applied during the COVID-19 pandemic that resulted in lost time.
Force majeure is a French legal term meaning the occurrence of circumstances beyond control that prevent the fulfilment of a contract.
Since last year, Vice President Dr Bharrat Jagdeo had indicated the Government’s intention to put the relinquished areas back on the market.
