Vice President Dr. Bharrat Jagdeo announced today that ExxonMobil Guyana Limited (EMGL) has communicated it “still has some interest” in the shallow water block S8, which it secured during Guyana’s first oil and gas licensing round.
ExxonMobil, along with its partners Hess New Ventures Exploration Limited and CNOOC Petroleum Guyana Limited, had won the block during the bidding process. Discussions were ongoing regarding the finalization of non-fiscal terms under the government’s newly drafted Production Sharing Agreement (PSA), which will govern all new awards.
Last week, during a press conference, Dr. Jagdeo had said, “Exxon pulled out…they wanted to use the area for carbon capture and storage and we don’t want to do that at this stage.”
However, at his press conference today, the Vice President disclosed that the oil company has since reached out to the government with an updated stance.
“Exxon has written to us that saying that, that might not be the full story, that they still have some interest in it,” Jagdeo shared.
According to the Vice President, the Minister of Natural Resources, Vickram Bharrat had indicated to him that Exxon had indicated that it would have walked away because the conditions of the auction “were not right.”
“They (Exxon) said that there might have been a misunderstanding, that they have not walked away from it. So let’s see how it goes,” Jagdeo said.
Notably, Exxon and its partners had no objections with respect to the fiscal terms. The government’s modernized Production Sharing Agreement outlines a requirement for a 10 percent royalty, a 10 percent corporate tax, and a 50/50 profit oil split, with a cost recovery ceiling capped at 65 percent annually.
However, in relation to the non-fiscal terms the partners were adamant that they would not sign the draft agreement as is. They expressed concerns about the punitive measures outlined in the new PSA; the relatively short time period set for aggressive work programmes and the increased red tapes.
