Shell, Chevron and Petrobras weigh oil auction bids

HOUSTON, March 6 (Reuters)

The first auction of offshore Guyana oil exploration blocks has lured at least 10 companies including Shell, Petrobras and Chevron, to consider the decade’s hottest oil region. The Commonwealth petrostate is offering 14 offshore blocks to speed economic development and reduce dominance of its oil sectorby an Exxon Mobil consortium.

Winning bidders are expected to be picked next month.

Vice President Bharrat Jagdeo spoke at the CERAWeek energy conference in Houston to solicit support for Guyana’s first competitive bidding round.

“We see this as big, transformative for our people. We are in a mad rush to get this done before net-zero comes,” he told Reuters, referring to the target to slash fossil fuel use by 2050.

He plans to meet U.S. government officials, international and state-run oil firms while in Houston.

Companies interested in the April round who paid for seismic data to evaluate the blocks and decide whether to submit offers, include six international producers, Energy Minister Vickram Bharrat said, without identifying the companies. None decided on bids as they wait for the government to release contract terms.

Guyana is considering a state investment firm that would hold stakes with partners in offshore blocks offered through government-to-government talks. The investment firm would not be an operator. Guyana estimates it has up to 25 billion barrels of oil and gas in place offshore. A consortium of Exxon Mobil, Hess and CNOOC operates the petroliferous 6.6-million-acre (26,800 sq km) Stabroek block, with over 30 discoveries to date.

Exxon, QatarEnergy, Shell PLC , Chevron Corp and Petrobras are among the oil giants that paid $20,000 for the geologic information available on the 11 shallow water and three deep-water blocks. With blocks in neighboring Suriname and Venezuela, Chevron’s main interest is to gain access to Guyana’s geological data. Exxon and QatarEnergy said they are waiting for the full contract terms to consider a bid. Shell said it is evaluating the offshore lease sale to determine a possible participation.

Guyana also has begun direct negotiations on the 14 blocks and other areas with governments that have state-controlled oil companies. Guyana also may reclaim up to 20% of Exxon’s biggest block and reoffer it in future. The government expects firms like QatarEnergy to both bid on the April auction and engage in direct negotiations, Jagdeo told Reuters .

 

 

SCHEDULE DELAYS

Guyana plans to issue a new Production Sharing Agreement (PSA) model for leasing offshore blocks by the end of this month, several weeks late. A draft proposal for a two-week public consultation earlier missed its Feb. 13 release.

The auction will receive bids through April 14. According to the bidding round plan, the winners would be disclosed between late May and early June after an evaluation.

The proposed rules will nearly double the government’s take from oil production to 27.5% of royalties and profit oil, plus a new 10% corporate tax, compared to Exxon’s main contract.

The new agreement also will require producers provide more information to Guyana.

“We believe it is asymmetric now, and a bit in favor of the companies. We want more information to come from the oil and gas companies.”

The new agreement will request details of the production costs that companies deduct before splitting oil revenue with the country. The Exxon group can now use 75% of the oil production to offset a variety of costs, including construction of its new Guyana headquarters.

The oil model also will set stricter terms for tendering and procurement, covering everything from production vessels to drilling suppliers. However, the terms will not affect Exxon’s Stabroek block.

“We are not renegotiating Stabroek. We don’t want to lose momentum.”

Reuters Graphics
Reporting by Sabrina Valle, Marianna Parraga; Marta Nogueira in Rio de Janeiro; Editing by David Gregorio and Tomasz Janowski

 

 

Draft Model Petroleum Agreements

March 14, 2023

The Ministry of Natural Resources, on behalf of the Government of Guyana, is pleased to announce the release of the draft Model Petroleum Agreements for both the deepwater and shallow-water area, and the commencement of a fourteen-day consultation period before finalisation.

The draft Model Petroleum Agreement embodies rigorous research and analysis by the ministry’s internal team, and external consultants on all topics relevant to a modern petroleum agreement for Guyana. The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context.

To ensure new investments are governed by a comprehensive framework of international best practices, the Model Petroleum Agreements will be followed by an overhaul of the 1986 Petroleum Act and Regulations.

Feedback on the draft model agreements should be addressed to the Minister of Natural Resources and sent to licensinground2022@petroleum.gov.gy with the Permanent Secretary copied,    jmckenzie@nre.gov.gy.

The indicative Guyana 2022 Licensing Round Schedule will be updated at www.petroleum.gov.gy/guyana-offshore-licensing-round-2022 and www.nre.gov.gy which will reflect the new timeline for the publication of the finalised Terms and Guidelines, Model Petroleum Agreement and process of bidding — all adjusted to facilitate maximum participation from global interest. Official Expressions of Interest (EOI) have been received for all fourteen blocks for tender of the Guyana 2022 Licensing Round, demonstrating global interest in Guyana’s shallow and deepwater offshore acreage.

The Model Petroleum Agreements represent the PPP/C Government’s commitment to its manifesto promise of establishing a model production sharing agreement (PSA), guided by industry standards and best practices. At the core, these are aimed at maximising the socio-economic benefits for our nation without disincentivising foreign investors in the sector. The Government of Guyana remains committed to a new era of oil and gas development, characterised by a competitive and favourable investment climate.

 

 

Revised 1986 Petroleum Act

Mar 15, 2023

With evident interest in 14 new offshore oil blocks in shallow and deep water the government is accelerating efforts to update the 1986 Petroleum Act.

A release from the Ministry of Natural Resources stated ,an overhaul of that law and key regulations are meant to ensure that new investments are governed by “a comprehensive framework of international best practices.”

Last year, Vice President Dr. Bharrat Jagdeo said the Petroleum Act would be revised by March 2023 to reflect the numerous changes in the petroleum landscape. The recent announcement of impending legislative changes, however, came as the government released new oil contracts and invited submissions on the contracts over a 14-day consultation period. The new model Petroleum Agreements, should be inked between the government and the countries or companies that successfully bid for the 14 oil blocks.

“The draft Model Petroleum Agreements embodies rigorous research and analysis by the ministry’s internal team, and external consultants on all topics relevant to a modern petroleum agreement for Guyana. The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context,” the Ministry said.

In the new contracts, there will be separate requirements for qualification to participate in deepwater versus shallow water blocks for tender with a higher bar set for deepwater areas, which reflects the capital-intensive nature of deepwater exploration and production (E&P) and the highly specialised technical competence required for deepwater E&P activities.

There will be a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks. The minimum work commitments specified for the initial and renewal periods of the prospecting license consist of a combination of seismic and drilling of exploration wells with the fulfilment of prior commitment as a precondition to enter into the subsequent renewal periods.

A participation fee of US$20,000 in respect of a block for tender will allow access to the virtual data room and participation in the competitive bidding process. Based on comments by top government officials, the administration is hoping to award new contracts by the end of May 2023; and bids should be closed in April.

“Official Expressions of Interests (EoI) have been received for all fourteen blocks for tender of the Guyana 2022 Licensing Round, demonstrating global interest in Guyana’s shallow and deepwater offshore acreage.“

Based on international reports, Guyana’s auction attracted at least 10 companies including Shell, Petrobras and Chevron. The government has invited countries to assess the auction and potentially bid for oil blocks. At the recently-concluded International Energy Conference and Expo in Guyana, Vice President Jagdeo said each investor will be allowed up to three blocks.

 

 

Petroleum agreements for public consultation

March 15, 2023

THE draft model petroleum agreements outline more benefits for Guyana, including a royalty rate rise from two per cent to 10 per cent, corporate tax of 10 per cent and a cap on cost oil of 65 per cent.

The agreements will now undergo a 14-day consultation period before finalisation. During this process, members of the public could send feedback on the drafts to the Minister of Natural Resources at licensinground2022@petroleum.gov.gy with the Permanent Secretary copied at jmckenzie@nre.gov.gy.

The agreements also include better provisions for the signing bonus, relinquishment terms, activities related to the abandonment of the block and an increase in the training fee.The new agreements cover fiscal and other terms under which the government will sign on to contractors who are awarded blocks, which Guyana will auction. Guyana is auctioning off three deep-water and 11 shallow-water blocks.

There is a separate agreement for the deep-water and shallow-water areas. The model petroleum agreements will be followed by an overhaul of the 1986 Petroleum Act and Regulations.

The agreements embody rigorous research and analysis by the ministry’s internal team, and external consultants on all topics relevant to a modern petroleum agreement for Guyana.

The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context.

The release stated: “The model petroleum agreements represent the PPP/C Government’s commitment to its manifesto promise of establishing a model production sharing agreement (PSA), guided by industry standards and best practices. At the core, these are aimed at maximising the socio-economic benefits for our nation without.”

Guyana is among 65 countries that launched auctions of oil blocks and the government worked with international consultant, IHS Markit Consulting, to offer the best terms that will see the country remaining competitive while also getting a fair deal.

In the new agreements Guyana would receive better terms and more benefit when compared to the 2016 Production Sharing Agreement (PSA).

• • For the deep-water blocks, the exploration period will be a maximum of 10 years, which will be divided into an initial period of three (the “First Phase”),
  • an optional first renewal period of three years (the “Second Phase”),
  • an optional second renewal period of two years (the “Third Phase”), and
  • an optional third renewal period of two years (the “Fourth Phase”).

 

• • For the shallow blocks, the exploration period will be for a maximum of five years, divided into an initial period of three (the “First Phase”),
  • an optional renewal period of two years (the “Second Phase”).

Under both agreements, the contractor’s annual rental will be US$1,000,000, and an annual training fee of US$1,000,000. The training fee marks an increase from the US$300,000 provided for in the 2016 PSA.

The signature bonus for the deep-water blocks is US$20 million, while US$10 million is for the shallow-water blocks. In both cases, the signature bonus shall not be cost recoverable.

The renewal of subsequent Petroleum Prospecting Licence would be subject to approval by the minister, and will depend on the contractor having fulfilled the obligations for the preceding phase. However, with each subsequent renewal of the Petroleum Prospecting Licence, the contractor will be required to incrementally relinquish at least 50 per cent of the existing area, an increase from the 20 per cent in the 2016 PSA.

For commercial discoveries, the Production License will be for an initial period of 20 years. However, if the commercial discovery relates to a Natural Gas Field, the term of the initial production period shall be 30 years.

At least one year prior to the end of the Petroleum Production Licence, the contractor can request to renew the licence for an additional period of up to 10 years

The contractor will be required to submit an exploration plan to the minister that includes all of the activities provided for in the Minimum Work Programme and set out the petroleum operations and estimated expenditure that contractor proposes to undertake during the term of the prospecting licence.

A budget for the exploration period shall be submitted simultaneously with the exploration plan, and the budget for each subsequent year no later than September 30.

The contractor shall submit to the minister for approval annual work programmes for each of the petroleum operations including abandonment.

The contractor cannot transfer its rights to the block without the prior written consent of the Minister.

The contract also includes provisions for all activities related to the abandonment of the contract area. Under this provision, the contractor will be required to establish an abandonment fund, at an international financial institution to be agreed between the minister and contractor.

The contractor will also have to perform all necessary site restoration and remediation. The structure of the abandonment fund and the terms for the administration of the fund shall be mutually agreed between the minister and contractor within a one-year prior to the start of contributions.

 

Exxon story of success

Mar 08, 2023

…company brought in oil ships, production ahead of schedule

ExxonMobil Corporation Chief Executive Officer (CEO) Darren Woods, told the annual S&P Global CERAWeek conference in Houston, Texas, “the story of success” in Guyana.     Woods highlighted the rapid pace of development of the US IOC in the country.

Exxon’s boss and S&P Global Vice Chairman Daniel Yergin discussed future investment strategies in the energy sector, when Yergin stated, “So let me ask you, mega projects, you did mention Guyana. ..that’s pretty incredible how fast that developed.”

Woods responded, “Yes it is….. if you look at that it’s really a story of success, and I would also tell you that we are very focused as we grow that production.”

Exxon’s affiliate Esso Exploration and Production Guyana Limited (EEPGL) is operator and holds 45 percent interest in the lucrative Stabroek Block of 6.6 million acres with 11 billion of proven barrels of oil. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.

On Exxon success in Guyana, Woods shared that the company was able to move from first discovery to first oil within five years, beating industry record. “We brought that from discovery to first production in five years which is, if not industry record is pretty close to it. When you think about what typically the timeframe (is), (it) typically (takes) the industry about 10 years. If you then look at what we have delivered since that timeframe, we are bringing in those ships [Floating production storage and offloading vessels] and that production ahead of schedule, we’ve beaten schedule for the two ships [Liza Destiny and Liza Unity] that we’ve got and the third one [Prosperity] that we are working on, that is expect to beat schedule.”

Woods claimed EEPGL was able to run production, “at a higher level than we have anticipated when we made those investments and staying focused.” The company is also focused on, “helping reducing emissions.”

Exxon is working on the US$2B Wales gas-to-energy project to bring gas onshore.

“We got a project that we are working on with the Government of Guyana to bring gas onshore to back out some of their higher emission intensity power to substitute that with gas. So we lower emissions and get better more reliable power to the people that’s a real win-win situation.”

Guyana signed onto a Production Sharing Agreement (PSA) with the oil major in a 2016 deal that gives Guyana 2% royalty. Presently, Guyana shares revenue with ExxonMobil after the company deducts 75 percent towards the cost incurred to develop resources in the Stabroek Block.

In this arrangement, with the lack of ring-fencing, Guyana pays for projects that are yet to commence production activities. Each month bills from future producing developments are added to the list of expenses to be cost- recovered by Exxon. After the 75 percent is deducted to pay back the oil company, Guyana then shares 50/50 of the 25 percent remaining with Exxon as profits.

This amounts to 12.5 percent of profits from the operations. Under the taxation provisions, Guyana agreed to pay ExxonMobil’s share of Corporation and Income Tax each year. Documentation is provided to the US company allowing it to avoid taxes in its home country for its earnings overseas.

Though the mere 2 percent royalty, massive tax breaks and the absence of a ring-fencing provision, are three key flaws of the 2016 Stabroek Block PSA, the government will not seek to renegotiate the deal.

At the second International Energy Conference and Expo 2023 held in Guyana, President of ExxonMobil’s Upstream Company, Liam Mallon lauded the breakneck speed with which ExxonMobil was able to halve the time to move from exploration to production in a deepwater project. He rejoiced that since the first discovery in 2015, the estimate of Guyana’s resource has grown to nearly 11 billion barrels, which makes it the largest in industry in the past decade.

“And really critically, we moved from the very first Liza 1 exploration well to first production nearly three years ago in under five years. That is roughly half the industry average time for a typical deepwater development.”

Exxon’s performance is in line with Vice President Jagdeo’s request for the oil and gas companies to accelerate exploration. While the Government has been pushing the oil companies to go faster, the country is without full liability insurance from the majors.

The oil major anticipates having six projects online with a capacity of more than 1.2 million barrels per day by end of 2027. However, “It is not just about pace. This story is way beyond pace. It’s also about developing responsibility.”

Mallon disclosed that what Exxon achieved in Guyana is “absolutely unique.” In his 40 years of working in the oil and gas industry, around the world and on almost all mega projects, “I have never in my career seen anything like this.”

Guyana’s coming auction of offshore oil exploration blocks attracted at least 10 companies including Chevron , Exxon Mobil ), Petrobras , QatarEnergy and Shell,  Reuters reported.

“We are in a mad rush to get this done before net-zero comes,” Guyana Vice President Bharrat Jagdeo told the CERAWeek energy conference in Houston.

Companies are waiting for Guyana’s government to release contract terms before deciding on bids, The government plans to issue a new Production Sharing Agreement model for leasing offshore blocks by the end of this month, several weeks late; the auction is set for April 14.

Guyana estimated it has as much as 25B barrels of oil and gas offshore, with the Exxon-led consortium making over 30 discoveries in the Stabroek block.
The proposed rules are expected to nearly double the government’s take from oil production to 27.5% of royalties, plus a new 10% corporate tax, compared to Exxon’s main contract.

Exxon Mobil “has executed brilliantly by expanding its production output counter-cyclically, allowing it to fully benefit from the favorable oil/gas spot prices in 2022,” but it may be time to sell to lock in recent gains, Juxtaposed Ideas writes in an analysis.

 

 

Government will not amend oil production contract

Mar. 08, 2023 Carl Surran, SA News Editor

Hess confirmed the consortium that controls Guyana’s oil production is prepared to relinquish 20% of the Stabroek oil block, but would not concede any areas where it now produces or intends to produce oil in the future. CEO John Hess told the CERAWeek energy conference in Houston that some misinformation spread related to the production sharing contract agreement with Guyana’s government, which said it plans to reclaim 20% of the block and may offer it to other companies.

John Hess said this was always a requirement, which the consortium agreed with the government when signing the PSC but the 20% would not come from the “prospective areas, not going to be where we have exploration plan, .. future exploration plan, .. the developments in production.”

The government has assured the consortium the PSC will not be amended. Hess Corp. is part of the Exxon-led consortium that controls the Stabroek block which contributed a series of massive discoveries.

Hess (HES) shares are “expensive, but for those willing to hold until the 2030s, we expect strong and growing free cash flow and returns,” The Value Portfolio writes in an analysis .

 

Guyana needs over 10 FPSOs – Hess

Mar 14, 2023

Hess Corporation’s Chief Executive Officer (CEO), John Hess told a recent energy conference that ExxonMobil Corporation may need more than 10 floating, production, storage and offloading (FPSO) to off-take the resources, with its rapid rate of discoveries offshore ,

Stabroek Block partners originally intended to have 10 ships to produce and store the 11 billion barrels of oil equivalent resources for sale. With a line of sight for six projects, this only accounts for 4.9 billion barrels of oil equivalent resources. It therefore leaves 6.1 billion barrels of resources to be used by the remaining four ships envisioned. Even if the partners pursue the construction of four massive vessels to each offtake 1.5 billion barrels of oil each, that still leaves for consideration, the 10 discoveries made by Exxon and its partners last year. Those finds have not been defined yet. Industry stakeholders assumed that they hold over one billion barrels of oil which will require a separate vessel or two.

ExxonMobil has approached the Environmental Protection Agency (EPA) to advance a 35 multi-well programme in the Stabroek Block, unlocking more resources requiring vessels for storage and production.

Partners envision a need for more ships as the resource grows. They are proceeding with accelerated production targets for the Liza Destiny and the Liza Unity vessels which are producing 400,000 barrels of oil per day (bps). Both ships are also operating beyond their nameplate capacity.

Liza Destiny’s nameplate capacity is 120,000 bpd but is now in the 150,000 bpd range while Liza Unity is producing just above its 220,000 bpd range. The third producing vessel, Prosperity, which will operate at the Payara field left the shipyard and is en route to Guyana. It would be hooked up and producing 220,000 bpd by the third quarter.

Hess said that the Yellowtail Project is ahead of schedule in terms of construction and is on stream for start-up in 2025. The company has two other projects in the pipeline, Uaru and Whiptail, the former of which is awaiting government approval.

“As we do more appraisal, we will be able to define the seventh ship which can be underpinned by our new discoveries or the Fangtooth-discovery. As we drill more next year and this year, we will have more definition for eight, nine and 10 ships and we will see where it goes from there.”

Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator with 45% interest in the Block. Hess Guyana Exploration Ltd. holds 30% interest, and CNOOC Petroleum Guyana Limited holds 25% interest.

The partners are in discussions to relinquish 20 percent of the acreage by 2024.

 

 

ExxonMobil advances appraisal at prolific Stabroek block

Supermajor drilling new well in the Fangtooth area

8 March 2023

Fabio Palmigiani in Rio de Janeiro

• • ExxonMobil is progressing with drilling activities offshore to appraise what could potentially be the company’s seventh production development in the prolific Stabroek block for the US IOC.
  • ExxonMobil started drilling the Fangtooth-2 delineation well with Noble Corporation drillship Noble Sam Croft.
  • The Maritime Administration Department stated the programme about 196 kilometres offshore is due for completion by the end of the month.
  • ExxonMobil has so far discovered hydrocarbons twice in the area, first in January 2022 with the maiden Fangtooth-1 wildcat, and then a year later with the Fangtooth 1-SE appraisal well.

 

First Stabroek relinquishment is a crossroads for Guyana

Offshore operators have an opportunity to win acreage

2 March 2023
Gareth Chetwynd in London

ExxonMobil will soon tell Guyana’s government which areas making up 20% of the prolific offshore Stabroek block it will relinquish.

The US supermajor was criticised for controlling such a large portion of Guyana’s offshore play and for enjoying terms that the World Bank described as “generous”.

ExxonMobil always pointed to Guyana’s former status as a high-risk exploration frontier of geological uncertainty and political risks.

When the Liza wildcat was finally drilled in 2015 after a decade of delay it was a true game changer, leading to discoveries so far amounting to almost 11 billion barrels of oil equivalent.

 

 

New PSA

March 1, 2023

Updated PSA expected to provide framework for upcoming auction of 14 offshore blocks.

NEW YORK CITY – Contract terms for a new production-sharing agreement (PSA) regulating future oil exploration licenses in Guyana are expected to be finalized by March 8, according to Evercore ISI’s latest Offshore Oracle report.

The new PSA is expected to provide the framework for an expected 2Q 2023 auction of 14 offshore blocks.

E&P activities offshore Guyana are continuing at a frenetic pace. The Noble Discoverer recently returned to spud the Wei-1 exploration well for CGX Energy, with the sixth-generation semisubmersible also drilling the operator’s first discovery (Kawa-1) in the Corentyne block, and positioned for follow-on work with Tullow Oil for an appraisal well in the Orinduik block.

ExxonMobil recently commenced a new 10-well exploration and appraisal campaign in the Stabroek block where it has discovered more than 11 billion boe in recoverable resources since 2015 (with eight discoveries in 2022 alone). Central to its plan to boost global oil production 13% by 2027, Exxon hopes to make a final investment decision (FID) on its fifth development offshore Guyana later this quarter. The proposed $12.7-billion Uaru project consists of an FPSO and 40-76 development wells.

Operating six drillships in the region, ExxonMobil has four Noble units contracted to November 2025 while two Stena units are contracted through June 2024 but have options extending to year-end. Exxon is producing nearly 400,000 b/d from its first two FPSOs (Liza Destiny, Liza Unity) while the third (Prosperity for the Payara field) is starting later this year.

A fourth FPSO (One Guyana for Yellowtail) is expected to start in 2025, with ExxonMobil targeting an FPSO starting each year through 2027.

Work is underway on the sixth project, Longtail, with a memorandum of understanding signed for the FPSO (Whiptail) and TechnipFMC increasing its estimated project scope to over $1 billion, according to Evercore. ExxonMobil’s partner, Hess Corp., has indicated there could be 10 FPSOs on location over time.

03.01.2023

Envoy hails acceptance of Stabroek deal

Mar 24, 2023

At a reception in honour of the visiting US Congressional delegation, United States of America Ambassador to Guyana, Sarah Ann-Lynch said that Guyana continues to hold to agreements made with U.S. oil giant, ExxonMobil.

“Since first oil, Guyana’s political leaders have honoured contractual commitments and continue to do so.” This posture signals the importance of the sanctity of contracts on the part of the Guyana Government. The Ambassador alluded to strides taken to make Guyana attractive to investors.

“They have been excellent partners in energy, agri-business, and security; they are taking bold leaps to transform the financial, education, health, and tourism sector.”

“As you have seen, in even your short time here, there are major infrastructure projects underway across the country, and the progress is constant.”

Government clearly wants to leverage the opportunities they are (already) receiving, and the United States stands ready to assist.

The administrationexpressed publicly that the PSA/Contract was inherited, and while they do not fully agree with all of the provisions, they would have to respect the ‘sanctity of contract,’ since to do otherwise, could shut down the industry and drive away investors—in country and potential.

From the onset of criticisms of provisions in the PSA, the Ambassador had acknowledged the right to renegotiation by the Government. In April 2019, the Ambassador had contended that it is within Guyana’s sovereign right to renegotiate the controversial PSA between the country and ExxonMobil Guyana and its partners.

“if it so chooses..…we certainly believe that Guyana is a sovereign country, so that [renegotiating] would be for Guyana to work that out with the private sector to see if there is room for renegotiation. We certainly won’t interfere with that.”

The PSA itself does provide room for renegotiations.

“…This Agreement shall not be amended or modified in any respect, except by written agreement entered to by all parties…”

The clause inherently accepts that by agreement between the parties, the contract can be changed. The parties in that 2016 PSA includes Esso Exploration and Guyana Limited (EEPGL)—ExxonMobil Guyana—Hess Guyana Exploration Limited,     China National Offshore Oil Company (CNOOC) and the Guyana Government, through its former substantive Minister for the sector, Raphael Trotman. ExxonMobil Guyana with a 45 percent interest in the Stabroek Block, for which the PSA was inked, is the Operator.

Hess holds a 30 percent stake while CNOOC controls the remaining 25 percent interest in the Stabroek Block. Guyana receives two percent royalty on oil produced and sold, while expenses are capped at 75 percent of the gross monthly production from producing oil fields. The remainder of earnings for that month is then split as profits, 50/50 with all arrears rolling over to the following months.

Wisely, Vice President, Bharrat Jagdeo, who plays a leading role in the judicious management of Guyana’s oil and gas sector, has, since taking power in August 2020, repeatedly dismissed the notion of renegotiations of Stabroek Block PSA, opting instead, to revise the terms in the new Draft Contracts, since released to the public.

President Irfaan Ali changed his public posture on the need to renegotiate the PSA. Addressing the matter of renegotiating the ExxonMobil contract for the Stabroek Block, Ambassador Lynch in 2019 had said the decision is one that would have to be taken by the government and the US would in no way intervene.

The Embassy’s role was not to be part of any negotiation but to ensure that its businesses are treated fairly. “Our main role in looking at this tremendous opportunity in the oil and gas industry…is that businesses are treated fairly. There is ample opportunity for growth and interaction with the government and mostly that there is a level playing field. That would be our focus.“

The industry is undergoing transition from fossil fuels and Guyana is sensibly taking the opportunity to develop the economy and allow the private sector to do what it does best, with the deep pockets of investors and the unsurpassed technological expertise accumulated over a century.