An ExxonMobil-led joint venture has recovered the billions of dollars it invested to develop the Stabroek Block, its chief financial officer told Reuters, and Guyana will now receive more oil money.
The joint venture’s Production Sharing Agreement (PSA) with Guyana allowed Exxon and its partners to take up to 75% of the oil to cover their exploration and development costs.
The accumulated US$55 billion invested since 2014 has been recouped about two years faster than expected because of the rapid development of the block, Exxon Chief Financial Officer Neil Hansen said in an interview with Reuters yesterday.
“We brought these investments on at an unprecedented pace and cost advantage,” Hansen said.
Under the PSA, the consortium splits profit oil evenly with Guyana after recovering costs. Reuters said that Exxon will now book about 100,000 fewer barrels per day from the country as it enters the third quarter, but free cash flow will increase by 2030 to twice the level seen in 2025, he said.
Exxon CEO Darren Woods said yesterday there is room for more exploration in Guyana and the company has used artificial intelligence to evaluate drilling and subsurface data. Reuters said that a portion of the block remains under force majeure due to a maritime border controversy between Guyana and Venezuela, which awaits a ruling by a United Nations court.
“We’re not done yet in Guyana and we continue to see a really bright future there,” he said during the second-quarter earnings call.
Exxon operates the Stabroek Block with a 45% interest. Chevron holds a 30% stake in the block after acquiring Hess Corp, the original partner in the consortium, and Chinese oil firm CNOOC holds 25%.
The consortium’s fifth and sixth projects in the Stabroek Block — Uaru and Whiptail — are expected to begin oil production this year and next year, respectively.
For years critics here have accused the Guyana Government and ExxonMobil of not ringfencing expenditure on each oil producing platform so as to enable a higher return to the country. For example when the full investment in the Liza-1 platform was recovered, Guyana should have received 52% of the revenues from this development instead of the 14.5% it currently receives from Liza-1, Liza-2 and from the other platforms. With no ringfencing occurring, ExxonMobil continued to take 75% of the oil from each platform to finance exploration at other sites in the block.
While the issue of higher profits to Guyana has been raised by the media routinely with the government here there has been no statement from it recently on the scale of expanded profits to this country.
Guyana’s Stabroek Block, estimated to hold at least 11 billion barrels of oil equivalent, has become one of the top assets of the U.S. oil producer’s portfolio since its discovery in 2015. Revenue from the field has made Guyana one of the fastest-growing economies in the world, with the country now producing more than 900,000 barrels per day.
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