Govt. quashes Granger’s one-year extension for Kaieteur and Canje Blocks but not for Stabroek Block

Aug 31, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Though former President, David Granger had granted a one-year extension on the exploration works to be executed on three deepwater oil blocks operated by ExxonMobil, the current administration did not comply with it in full.

According to a statement from the Ministry of Natural Resources, it only allowed the extension to be applied for the Stabroek Block and not the Kaieteur and Canje blocks.

Granger had granted the extension to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) just a few days’ shy of handing over the reins of office to his successor, President, Dr. Irfaan Ali.

The request for said extension on the three blocks was made by EEPGL’s Head, Alistair Routledge in a letter to Granger months after the country held a tumultuous General and Regional Elections in March 2020. Routledge’s request cited the impacts of the COVID-19 pandemic and its effect on the company’s drilling programme.

The signed extension was also released by the Ministry of Natural Resources to prove to the political opposition that it was its former Head of State, David Granger, who gave the now controversial extension and not the current government as the opposition had claimed.

Significantly, the ministry pointed out that Granger’s extension was not allowed for the Kaieteur and Canje Blocks. This may be due to the fact that Exxon was unable to prove that its exploration programme for those two blocks was indeed inhibited. This news agency previously reported that during the 2020 to 2021 period in which Exxon was granted the extension, the oil giant drilled Guyana’s deepest well called Tanager-1 in the Kaieteur Block followed by three other wells in the Canje block.

Contrastingly, the government has maintained the one-year extension for exploration on the Stabroek Block where Exxon has made over 33 discoveries. Executive Members of the Alliance For Change (AFC) and the A Partnership for National Unity (APNU) have said they disagree with this decision since Exxon was in full production mode for all of 2020 at the Liza Phase One Project. They also underscored that Granger’s extension carried a clear condition for quarterly reviews to be done to better understand if that one-year extension required adjustments. Both political parties even demanded that the government show evidence that it did due diligence in this respect. Vice President, Dr. Bharrat Jagdeo has refused to do so.

A map showing the location of the Kaieteur, Canje and Stabroek Blocks, all of which are operated by ExxonMobil’s subsidiary, EEPGL

At a press conference last week, the chief policy maker for the sector said Exxon submitted reports in 2020 which showed that its exploration programme was affected. Instead of being able to use six drill rigs, it was only able to use four. Jagdeo said the government was satisfied that this showed the extent to which the work programme was affected by the COVID-19 pandemic hence the extension was kept.

The extension for the block is a crucial matter as it delays from October 2023 to October 2024, the release of 20 percent of the lucrative Stabroek Block spanning 26,800 km2. That 20 percent would be equivalent to 5360km2. This portion is also larger than any of the 14 oil blocks the government has on offer for the country’s maiden oil round.

Exxon is also overdue for the relinquishment of portions of the Kaieteur and Canje Blocks. For the Kaieteur Block, the agreement governing this concession states that 25 percent should have been relinquished in 2019 and another 20 percent given up in 2022. The total portion to be relinquished would be equivalent to approximately 5414 km2.

In Canje, 20 percent of the block was returned to the State in 2019 which was equivalent to 1,220km2, thereby reducing the block to 4880km2. It now owes another 20% which amounts to 976km2.

In the oil and gas sector, “relinquishment” refers to the process where a company returns by specific timelines, portions of an area it was allowed to explore or produce oil and gas. Relinquishment, according to several pieces of literature, is considered critical for governments as they can auction those returned portions to other oil companies, thereby channelling more opportunities for revenues to the State.

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