ExxonMobil’s Canje Block is on course to expire this week, setting the stage for a full relinquishment of the offshore deepwater acreage.
Relinquishments are a key aspect of how Guyana’s petroleum systems function. They are built into contracts and reinforced by the Petroleum Activities Act, ensuring companies are given time-bound opportunities to explore, but not indefinite control over acreage.
Relinquishment often happens in two ways: partially and totally.
Partial relinquishment: The Stabroek example
Under typical petroleum agreements, contractors must surrender a portion of their block at specific points during the exploration period. In Guyana’s new model petroleum agreement, the requirement is 50%, but was 20% under previously awarded contracts like for the Stabroek Block.
However, that 20% is not calculated from the entire original acreage. Certain areas are excluded first:
- Areas under force majeure (where circumstances prevent normal operations);
- Areas containing discoveries;
- Areas designated for production.
In the case of the Stabroek Block, which spans approximately 26,800 square kilometers, ExxonMobil was granted force majeure over a portion in the western area after vessels conducting petroleum operations were apprehended by the Venezuelan military, making operations in that area troublesome.
When the required relinquishment juncture arrived in October 2024, the Ministry of Natural Resources and ExxonMobil had to determine which areas were exempt before calculating the 20%. After removing force majeure areas and discovery/production zones, the surrender amounted to roughly 9.5% of the total block acreage, not the full 20% of the original area.
That partial relinquishment was completed last year.
The principle is straightforward: companies retain acreage they are actively developing or legitimately prevented from exploring, while some unused acreage returns to the State.
Total relinquishment: When time runs out
Total relinquishment occurs when an exploration license expires without a commercial discovery progressing toward production.
That is the position facing Canje. No extension has been publicly announced, and the block is expected to revert fully to the State once the license expires.
A similar situation unfolded with CGX Energy and Frontera Energy in the Corentyne Block. The joint venture activated a contractual provision to secure additional time for appraisal work. Even with the extension, they did not advance a commercial discovery to the stage of issuing a notice of commercial interest, which is the first formal step toward seeking a production licence.
According to the government of Guyana, the Corentyne licence ceased to be in effect on June 28, 2024. The companies have pushed for additional time and have suggested arbitration remains an option, but the government’s position is that the acreage has reverted to the State and could be included in a future licensing round.
Why relinquishment matters
Relinquishment provisions are embedded in Guyana’s production sharing agreements, including the newer model contracts granted to companies such as TotalEnergies and Cybele Energy.
They serve several purposes:
- Prevent acreage hoarding;
- Enforce work program commitments;
- Ensure exploration proceeds within defined timelines;
- Allow the State to reallocate acreage if commerciality is not achieved.
Even in successful blocks, exploration licenses do not last indefinitely. Once discoveries move into approved development areas and production licences are granted, the contractor retains only the defined production zones. The broader exploration acreage eventually returns to the State.
