The renewal of oil giant ExxonMobil’s permit for the Liza 1 oil field, the field that has been producing oil since 2019, is still an inter-agency work in progress. This is according to Natural Resources Minister Vickram Bharrat.
In a recent interview with the media, Minister Bharrat was asked about the Liza field permit. This is because Exxo’s Liza field permit, which was issued in 2017 and modified last year, expires on May 31, 2022. According to the Minister, renewal is still a work in progress. However, he declined to give a timeline for when this would occur.
“We’re working on it. We’re working together with the other agencies on it, so at the right time…I don’t want to give any comments on it right now, which may not be accurate. So, at the right time, when we finalise the document, I’ll do so.”
Also a work in progress is Exxon’s application to extend its relinquishment of sections of the blocks it owns. According to the Minister, a decision has still not been taken on what to do with Block C.
“We have a team that is working on that at the Ministry. Because as Vice President would have mentioned, later in 2022 we’re going to auction the available blocks and acreages available. So that is something the Ministry and Petroleum Department is working on,” Minister Bharrat said.
“Block C is available. We have to ensure whether we’re going to auction Block C as it is, meaning the entire 9500 square kilometres. If we’re going to break it down into different parts, or whether we’re going to do a seismic,” he explained.
He reiterated that before the end of the year, they want to go to auction. When it comes to relinquishment, however, the Government must consult with companies who exercise their contractual options.
Guyana has long been expected to go out and auction oil blocks, both untapped and relinquished. Considering the 31 oil finds that have been made by oil giant ExxonMobil in the Stabroek Block, it is likely to be in a good position to leverage the value of those blocks when the context of the global oil and gas industry is considered.
The relinquishment clause is typically included in contracts, so that companies can relinquish a portion of the block when the renewable period is up, thereby allowing other companies to buy into the respective blocks.
For the Stabroek and Canje and, operators are required to relinquish 20 per cent of their blocks after the first renewal period; while those of the Demerara and Corentyne Blocks are expected to relinquish 15 per cent within this period.
The Kaieteur Block’s relinquishment provision is said to be 25 per cent, then 20 per cent by the first renewal; with the Mahaicony and Roraima Blocks at 25 per cent. By the time of the first renewal for the Orinduik Block, the operators are not expected to relinquish any portion.
Last year, ExxonMobil had applied to the Government for a one-year extension before it would be mandated to relinquish portions of the Stabroek block in 2023, where it has made a plethora of discoveries.
In its application, Exxon had cited the effects of the COVID-19 pandemic. It was explained by the company that COVID-19 delayed the start of certain drilling plans, which threw the company off of its targets.
Already, proposals have been received from various oil operators in Guyana’s waters for them to aid in Guyana setting up a national oil company. However, the Government is still mulling whether it would go this route.