ExxonMobil eight months late in relinquishing 45% of Kaieteur Block
By Kaieteur News
Petroleumworld 10 20 2021
When one considers amendments which were made to the Petroleum Agreement for the Kaieteur Block, it is clear that ExxonMobil is now eight months late on the relinquishment of 45 percent of the highly prospective offshore concession.
The Kaieteur Block, which spans 13,500 km2 and holds a gross, estimated prospective resource of 2.1 billion barrels of crude. To grasp a better understanding of the size of the block, it is bigger than the size of three of the founding members of CARICOM: Jamaica (10,991 km²), Trinidad and Tobago (5,131 km²), and Barbados (431 km²).
The massive offshore concession was awarded in April 2015 to Cataleya Energy Corporation (CEC) which was formerly Ratio Energy Limited and Ratio Guyana Limited, a subsidiary of Ratio Petroleum Energy Limited Partnership headquartered in Israel (Ratio Petroleum).
Subsequent to the Upper Cretaceous play-opening at the Liza-One discovery in May 2015, a farm-in agreement executed with ExxonMobil, along with various other arrangements, saw the effective date of the Kaieteur Petroleum Agreement being amended from April 2015 to February 2017.
With this in mind, it should be noted that a prospecting licence in the oil sector is up for renewal after four years. During that period, the company has to adhere to a work programme, and at the conclusion of same, it can elect to relinquish all or a portion of the block.
The PSA, when perused by Kaieteur News, notes at Article Four, which deals with Exploration Programme and Expenditure Obligation that the Contractor shall carry out minimum work commitments, during the periods into which Prospecting Operations are divided. The agreement notes that the initial period of four (4) years shall be divided into two (2) phases, each, having a duration of 24 months.
In the first phase, the contractor shall acquire all available 2D seismic data from previous surveys conducted over the Contract Area, process and/or reprocess as necessary, and interpret same. At the end of phase one of the initial period, the Contractor shall either elect to relinquish the entire Contract Area, except for any Discovery Area in respect of which the Minister is informed under section 30 of the Act and the area contained in any Petroleum Production Licence; or subject to Article Five, relinquish twenty five (25) percent of the Contract Area and commit to the Work Programme in phase two (2).
During phase two (2) of the initial period, the Contractor shall conduct a survey to acquire a minimum one thousand (1,000) line kilometers of new marine 2D seismic and/or five hundred square kilometers (500 sq. 1cm) of new 3D seismic over the Contract Area, process, and interpret same.
At the end of the initial period of four years, the Contractor shall elect either to relinquish the entire Contract Area or, subject to Article Five, relinquish twenty percent (20%) of the Contract Area except for any Discovery Area in respect of which the Minister is informed under section 30 of the Act and the area contained in any Petroleum Production Licence and renew the Petroleum Prospecting Licence for a further period of three (3) years.
It therefore means that at the end of the first four years, ExxonMobil should have handed over
to the State, 45% of the Stabroek Block. This should have been done by the PPP/C Government since February.
In a brief note, Kaieteur News had asked ExxonMobil Guyana’s new Head of Media and Communication, Janelle Persaud, to provide the dates when the first relinquishment for the Stabroek and Kaieteur Blocks will be triggered. The Exxon official only said, “…we will make all relinquishments required under our Petroleum Agreements in a timely manner in accordance with applicable law.”
In the meantime, ExxonMobil has applied to the Environmental Protection Agency (EPA) to be authorized to drill 12 wells in the Kaieteur Block which is located in deep water over 200 kilometers northeast of the coastline of Georgetown, Guyana, and adjacent to the northern boundaries of the Stabroek and Canje blocks. Approval from the Ministry of Natural Resources and Guyana Geology and Mines Commission will also be obtained.
The Kaieteur Block is currently operated by ExxonMobil’s subsidiary, Esso Production & Exploration Guyana Limited, in partnership with CEL, Ratio Guyana Limited and a subsidiary of Hess Corporation.