Cost recovery continues to be accelerated for Stabroek Block operator ExxonMobil and co-venturers Hess and CNOOC, surpassing US$25 billion at the halfway point of 2024. According to Mid-Year data from the Guyana government, oil exports from the block have generated US$9.4 billion in the first half of 2024, with US$7.5 billion allocated to cost recovery. This pushes the cumulative cost recovery to over US$25 billion since oil production started in December 2019.
Cost recovery for the Stabroek Block has steadily climbed over the years, beginning with US$633 million in 2020, US$1.96 billion in 2021, US$7.44 billion in 2022, and US$8.38 billion in 2023.
Though cost recovery was initially projected to surpass US$30 billion by the end of 2024, the Guyana government has revised its forecast for oil exports due to increased oil production. The government now expects oil exports to generate more than US$18.6 billion this year, up from an earlier estimate of US$16.8 billion. This revision suggests that cost recovery could now exceed US$32 billion by year’s end. The increase in oil production, driven by output at Liza Phase 1 and 2, and Payara, has boosted both revenues and the pace of cost recovery.
Guyana’s production sharing agreement with ExxonMobil and its partners in the Stabroek Block allows for recovery of exploration, development, and production costs by setting aside 75% of annual production, leaving the ‘profit oil’ to be shared with the government. Oil production for the entire year is now expected to reach 228 million barrels, up from the earlier forecast of approximately 202 million barrels. This cost recovery mechanism has been essential in compensating the companies for the significant investments made to bring these offshore projects online. Committed investments now exceed US$50 billion.
Their investments have so far added projects that produce oil at a combined rate of more than 600,000 barrels per day (b/d). This rate is expected to increase to 1.3 million b/d by 2027.
As production increases and new projects are sanctioned, including the upcoming Yellowtail and Uaru developments, the rate of cost recovery is expected to continue its upward trajectory. The pace is also impacted by the evolution of oil prices, Vice President Bharrat Jagdeo said during a recent press conference.
“The inexorable trend or tendency is that the revenue in the future will grow significantly, because we’re accelerating the amortization of the cost bank,” Jagdeo said.
ExxonMobil is the operator of the Stabroek Block and holds a 45% stake in the projects. Hess holds 30% and CNOOC 25%.
