Guyana aims to reclaim, offer 20% of Exxon oil block

Frontera Energy

17/02/2023 21:05

(Adds details, background and comments from vice president)
    By Sabrina Valle
       GEORGETOWN, Feb 17 (Reuters) - Guyana Vice President
Bharrat Jagdeo told Reuters the country plans to take back 20%
of the giant Stabroek oil block that has been responsible for a
series of massive discoveries from a consortium led by Exxon
Mobil Corp., and remarket it by next year. 
    More than 11 billion barrels of oil and gas found to date in
the 6.6 million acre (26,800 sq km) block. The group's contract
allows Guyana to reclaim unexplored portions this year, Jagdeo
said in an interview from the country's capital. 
    Guyana is pursuing a multi-pronged strategy to lessen the
consortium's grip on the country's oil resources, Jagdeo said,
and spur new oil production. 
    The U.S.-Chinese group produces 380,000 barrels of oil and
gas per day from two projects within the Stabroek block, and
expects to increase output to 1.2 million barrels by 2027. The
least-developed country in South America expects to collect
$1.63 billion in oil royalties and fees this year.
    "We need more competition," Jagdeo said in an interview
during a energy conference in Georgetown.
    One year ago, he said Guyana wanted to recruit
state-controlled oil companies to develop new fields. The
decision to reclaim existing Exxon blocks signals urgency to
speed development.   
         The clawback comes amid continued criticism of the
original deal under a previous government as too one-sided for
the oil companies. 
  
    MISSED DEADLINES   
    The Exxon group has missed investment deadlines for portions
of the block not under exploration or development, he said, and
under terms of the license, Exxon must relinquish a minimum of
20% of the contract area not retained under a exploration or
production license.
    "Exxon cannot keep it, that would be illegal," the
vice-president said. 
    Exxon said it and its Stabroek partners are in compliance
with the Petroleum Agreement and the Petroleum Act, including
their acreage relinquishment requirements.  
    "We are in ongoing discussions with the Government regarding
those requirements, in respect to both timing and area,"
spokesperson Meghan Macdonald said.
    Separately, Guyana is working on an auction of exploration
licenses to 14 offshore blocks outside of Exxon's domains in
what would be the country's first competitive auction. It also
has proposed offering blocks to India, Qatar and the United Arab
Emirates or national oil companies.   
    Energy Minister Vickram Bharrat told Reuters eight
companies, including well-known oil producers, have paid to
access geological data of the areas set to be auction next
quarter. Exxon and QatarEnergy have publicly disclosed their
interest.
    Parallel to the auction, Guyana has been in direct talks 
with countries such as Qatar, India and United Arab Emirates
over bilateral oil agreements, under different terms from those
granted for private oil producers, he said. 
    "I believe that some of them will bid on the 14 areas and
still explore bilateral discussions," he said.
    (For a graphic of Guyana's 14 blocks on offer, please go
here: https://tmsnrt.rs/3K8P0xY)
 
    Jagdeo also hopes to engage Brazil's state-run Petroleo
Brasileiro S.A.  PETR4.SA  and the Brazilian government, where
his old political ally, Luiz Inacio Lula da Silva, in January
started his third presidential term.  
    "We want Petrobras to be involved here," Jagdeo said, adding
integration between the two countries advanced under Lula's past
presidencies. "We are waiting anxiously for Lula to settle in,"
he said.
    Guyana also has development areas outside the
soon-to-be-auctioned 14 blocks, and is prepared to offer them to
"these countries on a bilateral level." 
    Among those are blocks closer to shore than the producing
fields, two blocks returned to the government by Toronto-traded
firms CGX Energy  OYL.V  and Frontera Energy  FEC.TO , and the
20% of undeveloped Stabroek Guyana aims to reclaim, he said.
    "If bilateral talks don't go well, next year we will offer
another round," Jagdeo said. "The deal has to be favorable to
Guyana."    
    In December, Guyana released new fiscal terms that increased
its share of the oil proceeds, between production and royalties,
from 14.5% to 27.5%, plus a corporate tax of 10% after profits. 
        Companies including Exxon are now waiting the government
to release a new production sharing agreement (PSA) model that
will set terms for the blocks on offer as well as projects yet
to start the development phase. 
  
        The PSA draft will go through public consultation
through March 8 and is expected to be finalized before an April
14 auction, Jagdeo said.
  
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Offshore oil blocks on offer in Guyana's 2023 licensing round   
  https://tmsnrt.rs/3K8P0xY
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Sabrina Valle; Editing by David Gregorio)
 ((sabrina.valle@tr.com | Twitter: @sabrinavalle))