ExxonMobil, Hess and CNOOC are not backing out of talks with the Guyana government for a shallow water block they were awarded after the country’s first offshore auction.
Guyana’s Vice President, Bharrat Jagdeo, said during a Thursday press conference that his earlier comments about ExxonMobil pulling out was based on a misunderstanding. Jagdeo had said last week that ExxonMobil pulled out because it wanted to use the block for carbon capture despite the government not being ready to accommodate that.
The Vice President said the company reached out to the government after he made that public statement, indicating that it is still interested in the block. He said based on further inspection; it became apparent that “there might have been a misunderstanding”.
“Since my public statement, Exxon has written to us saying that that might not be the full story. [They said] that they still have some interest in it [Block S8]”, Jagdeo said.
Talks have been ongoing for more than a year.
Guyana introduced a new model petroleum agreement to issue to companies from the auction. These included changes to fiscal terms, hiking royalty from 2% (which applies to Exxon’s Stabroek Block) to 10% for new deals, adding a 10% corporate income tax, and lowering the cost recovery ceiling from 75% to 65% of crude produced annually.
Exxon had said that while it is normal for a maturing jurisdiction to introduce terms that increase its take from hydrocarbon production, it was taking issue with some non-fiscal terms. ExxonMobil Guyana President Alistair Routledge last year criticized the proposed contract as proposing timelines for acquiring and processing data— and for making decisions— that are “unusually short for offshore.”
Vice President Jagdeo had said that Guyana will not “weaken” the contract to suit ExxonMobil, arguing that the drafting of the contract benefited from international expertise.
ExxonMobil, in concert with CNOOC and Hess, was awarded Block S8. The group is one of several that were successful participants in the auction. Another notable group, including TotalEnergies, PETRONAS and QatarEnergy, have completed negotiations with the government for another block.
ExxonMobil, Hess and CNOOC are co-venturers in the Stabroek Block, where they have discovered about 11 billion oil-equivalent barrels, and committed approximately US$55 billion to hike production to 1.3 million barrels per day (b/d) by 2027.
Currently, the consortium is producing 660,000 b/d, with US$5.5 billion in revenue going to the Guyana government since first production in December 2019.
