Govt, ExxonMobil still in talks on model PSA for S8 oil block – Routledge

– as Govt gears up to sign 4 new oil
contracts this month

As the Government prepares to sign new oil contracts with four companies for exploration activities offshore Guyana, President of ExxonMobil Guyana, Alistair Routledge says the company is still in talks with the Natural Resources Ministry on the terms for developing the oil block that it won in the 2022 bid round.
“We are continuing the discussions with the Government… in fact, just about a month ago, we made some further submissions to the Ministry of Natural Resources on the model PSA. “We’re continuing a very constructive discussion about the terms in that model PSA,” Routledge shared during a press conference on Monday.

ExxonMobil and its co-venturers, Hess and CNOOC, won shallow-water oil block S8 in a bidding round launched in December 2022 and closed in September 2023. A few weeks ago, the Minister of Natural Resources, Vickram Bharrat, revealed that sometime this month, the Government will be signing Production Sharing Agreements (PSAs) with four companies that won blocks during that bid round.
Six companies had bid on eight of the 14 blocks that were up for grabs. The other companies that were awarded blocks include a Guyanese female-led company, Sispro Inc; Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia); Liberty Petroleum Corporation of the United States, in partnership with Ghana-based Cybele Energy Limited; 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.
Since then, the Government has been in negotiations with these oil block awardees.  But Minister Bharrat has since disclosed that the bidders with whom the Government will be signing PSAs are the consortium of TotalEnergies, Qatar Energy, and Petronas for block S4; International Group Investment Incorporated for blocks S5 and S10; Cybele Energy for block S7; and Sispro Inc. for block S3.
The new PSA includes updated measures to ensure that the country gets more benefits from new oil deals. These include 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.
The 2016 oil contract for the Stabroek Block, signed between the ExxonMobil-led co-venturers and the then A Partnership for National Unity+Alliance for Change (APNU+AFC) Coalition Government for production in the oil-rich Stabroek Block, had been heavily criticised for low royalty, lack of ring-fencing provisions, and cost oil claims that saw Guyana losing billions.

Carbon Capture
During a press conference earlier this year, Routledge 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 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 operation.
“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 its operations. However, he noted that a carbon capture development will benefit not only the oil major but also Guyana’s low-carbon development credentials. (Devina Samaroo)