United States oil giant ExxonMobil could soon follow its Stabroek Block partner Hess Corporation in buying Guyana’s “high-quality” carbon credits as part of its commitments to climate action.
This is according to ExxonMobil Guyana President, Alistair Routledge, following the signing of a historic US$750 million deal on Friday by the Guyana Government for the sale of over 33 million certified carbon credits to Hess Corp.
Routledge told reporters that trading carbon credits is among the options being considered by the oil major in its efforts to manage climate change.
“This is great news for Guyana. ExxonMobil is looking at lots of different ways to manage climate change and this [trading of carbon credits] is always going to be one of the considerations,” he related.
Asked whether any discussions have already started in this regard with Guyanese authorities, Routledge indicated he “can’t comment on anything that’s in the future.”
Meanwhile, Vice President Bharrat Jagdeo, who led Guyana’s negotiations with Hess, stated on Friday that there are several proposals being put forward but Government wants to wait before striking another deal to allow for much more favourable market conditions for Guyana.
In a July 2022 progress report on Advancing Climate Solutions, the US-based ExxonMobil said it aims to achieve net-zero emissions from its operating assets by 2050 and is taking a comprehensive approach centred on developing detailed emission-reduction roadmaps for major operating assets.
This ambition applies to Scope 1 and Scope 2 greenhouse gas emissions. It builds on the oil company’s 2030 emission-reduction plans, which include plans to reach net-zero emissions in its Permian Basin unconventional operations by 2030, and ongoing investments in lower-emission solutions, including carbon capture and storage, hydrogen, and biofuels.
“The company’s roadmap approach identifies greenhouse gas emission-reduction opportunities and the investment and policy needs required to achieve net-zero. The roadmaps are tailored to account for facility configuration and maintenance schedules, and they will be updated as technologies and policies evolve. Net-zero roadmaps for major assets are ahead of schedule and expected to be completed by year-end 2022,” the report detailed.
As the operator of the oil-rich Stabroek Block, ExxonMobil, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), along with its co-venturers Hess and CNOOC Petroleum Guyana Limited begun producing oil offshore in December 2019. There are currently two floating production storage and offloading (FPSO) vessels pumping oil.
However, the US oil major envisions about 10 FPSOs operating in the Stabroek Block, where over 30 discoveries have been made since 2015, amounting to more than 11 billion barrels of oil equivalent.
During his remarks at Friday’s sale agreement signing with Hess, VP Jagdeo contended that there is no conflict in Guyana continuing to extract its fossil fuel resources with the country’s climate objectives.
“We support net-zero. We support early decarbonisation. We support the removal of subsidiaries from fossil fuel production. We support those global objectives… but in countries like Guyana, we have to secure our funding to continue to make our contribution to global climate change objectives [and to also] secure this country… and developing the oil and gas sector can allow us to get the revenues to fund the billions of dollars of adaption needs that we have to meet,” he asserted.
Contending that the People’s Progressive Party/Civic Administration is committed to a balanced approach to development, the VP pointed out that even with 10 FPSOs operating offshore Guyana, the country will still remain carbon negative given its vast pristine forest resources.
Guyana is home to more than 18 million hectares of forests that are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent.
With the aim of monetising this resource, Guyana made history on December 1 by becoming the first country to receive certification of over 33 million carbon credits by the Architecture for REDD+ Transactions (ART). That issuance of the REDD+ jurisdictional carbon credits paved the way for Friday’s signing of the sale agreement with Hess Corp.
This ground-breaking deal will see Hess buying 2.5 million credits per year for the period 2016 and 2032, valuing US$750 million. However, it was explained that while the deal is for a 10-year period, that is, 2022 to 2032, the Guyana Government was able to negotiate, as part of the sale agreement, for the oil major to also purchase some 12.5 million carbon credits from the period 2016 to 2020 – referred to as “legacy credit”.
However, these 33.7 million credits being sold to Hess Corp is just 30 per cent of the carbon sink contained in Guyana’s vast forest cover. The remaining 70 per cent of carbon credit will be put on the market for future sale agreements.