Discussions on model PSA for S8 oil block still ongoing – Routledge

Negotiations between the United States oil major ExxonMobil and the Natural Resources Ministry on the terms for developing the oil block that the company won in the 2022 auction are still ongoing nearly three years later.
This was revealed by the President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge, during a press conference on Thursday at the company’s Ogle, East Coast Demerara (ECD) headquarters.
“We’re continuing discussions with the Government on the petroleum agreement. And I really do not have any substantial update to give you,” Routledge said.
Further pressed on whether these discussions could possibly wrap up by this year-end, the Exxon boss declared, “I will be careful not to forecast something I don’t control.” I’ll leave it at that.”
ExxonMobil and its Stabroek Block co-venturers, Hess and CNOOC, won shallow-water oil block S8 in a bidding round launched in December 2022 and closed in September 2023.
In the past, the delays in these negotiations were rooted in efforts by the People’s Progressive Party/Civic (PPP/C) Government to secure more benefits for the country under a new and updated fiscal regime.
This new model Production Sharing Agreement (PSA) includes the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate, the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from the previous 75 per cent while maintaining the retention of the 50-50 profit sharing after cost recovery.
It replaces the 2016 Stabroek Block PSA inked between the then A Partnership for National Unity + Alliance for Change (APNU+AFC) Administration and ExxonMobil, which had been heavily criticised for a low two per cent royalty, lack of ring-fencing provisions, and cost oil claims that saw Guyana losing billions, among other issues.
During a previous press conference last year, Routledge had reaffirmed ExxonMobil’s interest in the S8 block and noted that the company is considering the possibility of not only oil production but also using the block for carbon capture.
“We’re very interested in the block, and that’s why we continue to have our discussions with the Government. We wouldn’t do that if we weren’t committed to trying to finalise a good agreement that works for the country and works for us,” Routledge told reporters over a year ago in February 2025.
There had been speculation that ExxonMobil and the Government were in disagreement over using the block for carbon capture and storage, which is the process of capturing carbon dioxide (CO₂) at emission sources and storing it, thus keeping it from being released into the atmosphere.
Asked whether the company›s main focus is to use the block for carbon capture and storage, Routledge noted that this was one of the options that ExxonMobil would explore.
“Our first priority, and this is in line with the Government, is to understand whether or not there are economically producible hydrocarbons in the block. But we do have a longer-term ambition, which is part of our overall corporate goal, to achieve the 2050 target of net zero across our operations.”
“And as part of that, we’re looking at the S8 block. If there are not hydrocarbons there, or indeed, should there be hydrocarbons and we can produce them first, would there be a good location for us to sequester CO₂ in the future?” Routledge questioned.
According to the executive, ExxonMobil operates on a multi-decade basis, so they will have to determine this in the near future in order to better plan their operations. However, he noted that a carbon capture development will benefit not only the oil major but also Guyana’s low-carbon development credentials.
Meanwhile, the Guyana Government has already signed two PSAs under this new regime for two oil blocks offshore – Block S4 with a consortium led by TotalEnergies (40 per cent), QatarEnergy (35 per cent), and PETRONAS (25 per cent); and Block S7 with Cybele Energy out of Ghana, inked in November and December 2025, respectively.
Six companies had bid on eight of the 14 blocks that were up for grabs during the country’s first oil block auction. The other companies that were awarded blocks include a Guyanese female-led company, Sispro Inc; International Group Investment Inc of Nigeria; and Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and the Arabian Drilling Company of Saudi Arabia.
Last September, Natural Resources Minister Vickram Bharrat had revealed that the Government was gearing up to sign oil deals with four companies. While the PSA was inked with the TotalEnergies consortium and Cybele Energy, the deals with International Group Investment Incorporated for Blocks S5 and S10 and Sispro Inc. for Block S3 are yet to be signed.