“Misunderstanding” – Exxon says it is still interested in shallow block
Nov 29, 2024
Kaieteur News- ExxonMobil Guyana Limited (EMGL) is still interested in the government’s first oil block auction, Vice President Bharrat Jagdeo revealed on Thursday. He made the disclosure following his announcement last week that the U.S. oil giant had pulled out of the auction.
ExxonMobil, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited were approved for the shallow water block –S8. Last month, the Ministry of Natural Resources in an update on the competitive bidding round for the petroleum exploration licences, disclosed that four companies have accepted the new Production Sharing Agreement (PSA) while ExxonMobil is still reviewing the PSA.
Vice President Bharrat Jagdeo
However, during Jagdeo’s November 21, press conference he was asked for an update on the auction and during his response on why this process has been dragged out this long.
Jagdeo had disclosed, “…So then the others, remember Exxon pulled out and they wanted to use the area for carbon capture and storage, and we don’t want to do that at this stage.”
On Thursday, the Vice President said that since his public statement last week that the oil company has walked away from the auction, “Exxon has written to us saying that that might not be the full story, that they still have some interest in it.”
He continued, “So from last week to now, after my press conference and I verified it with Vickram Bharrat, that was said in a meeting, and they said that there might have been a misunderstanding that they have not walked away from it. So, let’s see how it goes.”
President of EMGL, Alistair Routledge (Misunderstanding)
Guyana’s maiden auction launched in December 2022 featured 14 blocks but only eight received bids. The fiscal regime of the new PSA requires the payment of a 10 percent royalty and a 10 percent corporate tax. The cost recovery ceiling will be capped at 65 percent each year, while profits will be shared 50/50 between companies and the State.
ExxonMobil is the operator of the Stabroek Block, and it holds 45% interest in that block. Its partners Hess and CNOOC hold 30% and 25% respectively. Guyana’s oil-rich Stabroek Block, operated by ExxonMobil, requires a meagre 2% royalty, no taxes, 75% cost recovery ceiling each month which leaves 25% of profit to be shared with Guyana. Stakeholders had warned that the terms of the Exxon deal could deter investment since the new PSA now requires greater fiscal benefits for the country.
This led to calls for new projects in the Stabroek Block to be subjected to these terms; however, the government remains adamant that seeking greater benefits could slow the pace of development and chase investors.
(“Misunderstanding” – Exxon says it is still interested in shallow block)
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