A request made last year by ExxonMobil to the Government of Guyana, to have the relinquishment of a percentage of its holdings in the Stabroek Block deferred, is still under consideration by the relevant authorities.
In a recent interview with this publication, Natural Resources Minister Vickram Bharrat confirmed that no decision has been made yet on ExxonMobil’s request for an extension of its hold on the blocks due to be relinquished next year.
While a decision has not been made, Bharrat noted that ExxonMobil’s position is not unique when it comes to oil companies requesting extensions. He noted that a number of other Governments have also fielded such requests.
“That’s under consideration. Because a lot of countries, as a matter of fact, are being faced with a request similar to this, due to the COVID situation. So, it’s something that we’ve been examining,” Bharrat said.
Guyana has long been expected to go out and auction oil blocks both untapped and relinquished. Considering the over 25 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, Canje and Stabroek Blocks, 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, ExxonMobil 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 from 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 will go this route.
During his address to the International Energy Conference and Expo, Vice President Bharrat Jagdeo had spoken about the proposals they have received from these operators. According to Jagdeo, operators have been proposing to work with the Government on setting up a national oil company, using the available oil blocks in Guyana’s waters.
