CNOOC ready to monetise Guyana’s gas

Aug 30, 2024 News

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– says fossil fuel crucial for foreseeable future

Kaieteur News – Amid deepening concerns over the monetization of Guyana’s gas resources with a controversial contract handed to a one-year-old United States company by the government, ExonMobil’s Stabroek Block partner – China National Offshore Oil Corporation (CNOOC) has expressed an interest in a similar deal.

According told Reuters news agency article, CNOOC Chief Executive Zhou Xinhuai told an earnings briefing on Thursday, the same day top executives met with Guyana’s President, Irfaan Ali and other ministers at the Office of the President. In a terse statement following the meeting, the Office of the President said Dr. Ali met with CNOOC Group’s Vice President and Chief Supervisor, Professor Yu Jing and fellow Vice President, Yu Jin along with a delegation.

Discussions, the Office of the President said focused on opportunities in the gas sector and ways in which CNOOC can align its corporate social responsibility with the Government’s social agenda. According to the statement, a number of key officials from the oil corporation were also a part of the meeting. President Ali was joined by Prime Minister, Brigadier (Ret’d), Mark Phillips; Senior Minister within the Office of the President with responsibility for Finance and Public Service, Dr. Ashni Singh; Minister of Natural Resources, Vickram Bharrat and Director of Presidential Affairs, Mrs. Marcia Nadir-Sharma.

CNOOC International holds a 25% working interest in the Stabroek Block, located approximately 200 kilometres offshore Guyana, covering 6.6 million acres. ExxonMobil is the operator with 45% interest and Hess – another US company has a 30% working interest. CNOOC’s interest in monetizing Guyana’s gas resources comes on the heels of revelation that a one-year-old US company Fulcrum whose owner, Jesus Bronchalo was a former Vice President of ExxonMobil Guyana was given the contract. The main opposition – People’s National Congress Reform (PNCR) has questioned the deal and also called for an investigation into the awarding of the contract.

Bronchalo founded Fulcrum LNG in July 2023, only five months after he left Exxon. He was employed with the oil giant for 19 years and one month prior to his questionable resignation. Bronchalo’s company was later selected by the Government of Guyana (GoG) to design, finance, construct, and operate the required gas infrastructure to provide gas monetization solutions and accelerate upstream gas developments in the country. The deal was announced by President Irfaan Ali in June 2024. There were no mentions of completed projects by Fulcrum on its website. Be that as it may, Kaieteur News understands that the main feature of Fulcrum LNG will involve the development of state-of-the-art gas processing and modular, scalable facilities to produce Liquified Natural Gas (LNG) and NGLS/LPGs for Guyana as well as regional and global markets.

The limited experience of the company has raised serious questions about its capacity to fulfill its contracted obligations. Bronchalo’s company was selected as “the most responsive compliant bidder” among 16 others who tendered to develop the non-associated gas in the Stabroek Block, operated by Exxon. Additionally, the CEO’s link to American oil super major ExxonMobil has sparked concerns among Guyanese, but the government has dismissed the possibility of a conflict of interest. In fact, VP Jagdeo during his Thursday press conference told reporters that Fulcrum LNG’s proposal was the best received by the government. Jagdeo said, “He had left Exxon but if anything, maybe the evaluators thought that he had the data on the gas. I don’t know if they did that…on the face of it, I thought it was the best proposal that the evaluators came up with and that’s what we’re looking for, so there is nothing I found wrong with the evaluation of the bids and I don’t see anything that has come out in any major way that’s wrong, except for that oh, he worked at one time with Exxon.”

Meanwhile, Reuters reported CNOOC Ltd as saying that fossil fuel will be a stabilising factor in global energy demand for the foreseeable future. CNOOC is a state-run company aimed to pump 700 million to 720 million barrels of oil equivalent for 2024, or 3% to 6% above the level of last year, CNOOC told an earnings briefing after posting a record interim profit. CNOOC expects domestic natural gas production to maintain strong growth through 2030 and stands ready to monetise vast gas resources in Guyana, Chief Executive Zhou Xinhuai told the briefing.

On new energy, Zhou said the company would focus on investing in projects that offer the best cost advantages, for example the commissioning of the world’s first 5-megawatt offshore high-temperature flue gas waste heat power plant.  CNOOC said it expected oil prices to keep in a range of $75 to $85 a barrel for the second half of 2024. It targets annual capital expenditure at 125 billion yuan to 135 billion yuan ($18 billion to $19 billion), versus last year’s 129.6 billion. We’ll be discussing that question with our guest today,  Its interim earnings at $11.2 billion were slightly below the $12.4 billion reported by PetroChina, Asia’s largest oil and gas producer, but more than double those of refining giant Sinopec, at $5.2 billion. ($1=7.0942 Chinese yuan renminbi)

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• CNOOC, ExonMobil’s, Guyana, Stabroek Block, Zhou Xinhuai

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