After cutting its losses on Guyana’s offshore acreage 10 years ago, Shell could make a stunning return.
Reuters’ sources say that Petrobras, Chevron, and Shell are considering bidding on the 14 oil blocks on auction in Guyana’s current licensing round.
Guyana’s Minister of Natural Resources Vickram Bharrat had told OilNOW on Feb. 22 that over 20 international oil companies (IOCs) have since expressed interest in the blocks.
But only 10 of them cemented this, by paying for the available data to evaluate the blocks. The sizes of the blocks on auction range from 1,000-3,000 square kilometres (sq. km).
By April, the bids will be opened.
Shell was ExxonMobil’s 50% partner in the country’s prolific Stabroek Block, where close to 11 billion oil-equivalent barrels have been discovered.
Exxon sent out 35 letters seeking new partners after Shell walked away from Stabroek Block | OilNOW
Shell could have shared in the success. But the company had already undertaken drill campaigns in Guyana during the period 1971 to 1976, that were not promising.
So, not wanting to invest millions in another dud, it made a calculated decision to back out and voluntarily gave up its shares in 2014, leaving ExxonMobil with 100% of the risk.
This decision was also underpinned by territorial controversies between Guyana and both of its immediate neighbours at the time; Venezuela and Suriname, which had already seen exploration vessels being seized and evicted.
The very next year, Exxon struck black gold with the Liza find – one of the biggest in the world at the time, having encountered 800 million to 1.4 billion barrels of oil equivalent resources.
To date, it has 33 discoveries under its bracket in the 6.6-million-acre Stabroek Block.
Shell realised it made a mistake leaving Guyana.
Back in 2021, Shell’s Vice President of Exploration – North America and Brazil at the time, Bill Langin, was asked about Shell’s departure. And this is what he said:
“We obviously did not realise the significant potential that sat in that block so, I say explorers are usually like baseball players; if we get it right a quarter of the time, we are doing well. Clearly, this is one that we did not quite get right at the time, unfortunately for Shell.”
Maybe they will get it right this time.
Shell can rival Exxon in deepwater experience and can bring some much-needed competition to Guyana’s offshore development since Exxon currently has an effective monopoly.
Click here to get more details on the Licensing Round: https://oilnow.gy/glr2022/