20% Stabroek Block relinquishment to start next year as Govt grants 1-year extension

…relinquishment non-negotiable; Hess says it has no objection – VP

The Stabroek Block co-venture partners will have until next year to relinquish 20 per cent of that Block, as the Government has given them a one-year extension to explore for oil in an effort to make up for the force majeure that was applied during COVID-19 that resulted in lost time.

Force Majeure is a French legal term meaning the occurrence of circumstances beyond control that prevent the fulfilment of a contract. The COVID-19 pandemic certainly hampered operations, and according to Vice President Bharrat Jagdeo during a recent press conference, this was a deciding factor in the one-year extension.
The Vice President also explained that a 10-year extension for gas supply was granted to ExxonMobil, separate from the one-year extension. This 10-year extension is intended to ensure that the gas-to-energy project will be assured of a consistent supply of gas from the Stabroek Block during the life of the project.
“The relinquishment provision will shift by one year. It’s not a negotiation. On the project to supply the gas to the pipeline, that will receive a 10-year extension. Because it expires, I think in 2037. And if the project comes on stream in 2025, then you would only have 12 years of the life of the project. You need at least 20 years of supply of gas to the project,” Jagdeo said.
“So those are the only two issues that are there. And we’re not in negotiation. We’ve agreed to do the extension of the Liza One, for that purpose. To supply more gas for a longer period. Because we wanted that. And then the force majeure that was given to them, in the COVID period, extends the relinquishment provision,” he further explained.
Jagdeo emphasised that the 20 per cent relinquishment, which was supposed to have occurred this year but has now been postponed to 2024, is non-negotiable and all that remains now is for discussions on how it will be completed.
“There is no negotiation. Now we have to sit and discuss with them the relinquishment of the 20 per cent. We’re clear about that. They have to relinquish 20 per cent of the block, by a particular date. That date, by this extension, would have shifted to next year… so we’re not really negotiating that, we’re discussing that,” Jagdeo said.

No objection
Hess Corporation, the joint venture partner of ExxonMobil in the Stabroek Block, meanwhile has no objections to relinquishing the 20 per cent. During a JP Morgan 2023 Energy, Power & Renewables Conference, Hess Chief Executive Officer John Hess explained that during the COVID period, Exxon was hampered by its inability to get workers into the country. As such, he said they were eventually forced to pause exploration drilling.

“The exploration in the block goes out to 2026. There are very active discussions with the Government about extending that exploration for one more year. I’d say those discussions are well advanced. It’s up to the Government to give us that one more year.”
“There’s also a relinquishment requirement that we would have, October 2023. That would also get another year. And that’s just a requirement of the licence… we pretty much have identified the 20 per cent acreage that we would relinquish. And it’s nothing material and prospective. So, we’re ready for that relinquishment whenever that time is,” Hess said.
Hess also gave some insight into what exploration the co-venture partners would be doing with the time they had left. He noted that over the next 12 to 24 months, they would broaden their horizons and look at other wildcats.
“We’re going to be looking at doing some exploration and appraisal inward… to see if we can cobble together potentially another development inward and stay tuned on that. We’re also going to be doing some work on the south-eastern part of the block that’s more gas and liquids, to really start to calibrate how much gas we have there.”
“That’s not something that we’re going to develop in the next several years, but we want to size that so we might have a potential development there in the outer years,” Hess said, noting that the partners’ intention is to develop as much oil as possible.

Last month, President of ExxonMobil Guyana, Alistair Routledge had said the company would likely finalise its Final Investment Decision (FID) on the gas-to-energy project, in which it is investing over US$1 billion to build out the pipeline and assorted infrastructure, after the Government makes the necessary changes to the Liza Field production licence… including the 10-year extension to give them more time to supply the gas.
While preparatory work has already started for the model gas-to-energy (GtE) project, the United States oil giant has not yet made an FID on the project. The delay is related to the Guyana Government’s review of the revised Liza Field Development Plan (FDP), which has had to be updated so it can cater to the gas-to-energy project and the necessary infrastructure. (G3)