Exxon should not participate in upcoming auction of oil blocks – Patterson

David Patterson
David Patterson

Former Minister of Public Works, and current shadow minister of oil and gas, David Patterson says that ExxonMobil should sit out the upcoming auction of Guyana’s remaining oil blocks offshore.

He made the statement at a press conference held by the Alliance For Change (AFC) on Friday.

 “I think they [Exxon have far more than]  the amount of blocks [legally allowed] in our state. There is nothing wrong with Exxon partnering [with a local company after the auction] if they want to lend their expertise. But I don’t think it is advantageous for us to have more than 50% or 60% of our oil fields controlled by one company,” Patterson said.

Minister of Natural Resources Vickram Bharrat recently told Stabroek News that government is still in the process of putting measures in place for the highly anticipated auctioning of available offshore blocks and consequently the auction would not be likely before the end of the third quarter of 2022.

He did not go into detail about the reasons.

Patterson said that when the APNU+AFC Coalition was in government they were trying to diversify the ownership of the offshore oil blocks. He said that they were looking, ideally, at local companies but were open to other countries outside of the US – where Exxon is based. He said that was also a means of ensuring no one country or company would have undue influence on the country’s oil sector.

“But I do think that Exxon has more than enough [oil blocks] at the moment. I do think that some of the blocks will be coming up to relinquishment because they may not be able to explore them all at the same time. So I don’t think that they not competing would be detrimental to them in any way possible,” Patterson posited.

Government has said that it wants local participation in the planned auction of available offshore oil blocks.

On his recent visit to the United States, President Irfaan Ali had urged American companies to tap into the opportunity and not miss the bid. He had told Reuters that this country expects the auction to attract new companies to its energy industry. And while it was reported by the Financial Post that government was weighing its options on including ExxonMobil in the bidding process, the President clarified that this was not the case. “We are hoping that the participants in the auction… will add diversification… there is no blockage against any company,” he told Reuters.

When asked whether local companies should be given the first opportunity to bid for those blocks, Patterson said yes and added that he hopes that Guyanese companies benefit more from the auction. He pointed out that there is a 5-10 years gap between exploration and production, so if Guyanese companies are successful that leaves them more than enough time to secure financiers and build capacity to function effectively.

“Five to 10 years, that’s more than enough time for Guyanese to build a capacity and more than enough time for them to get financing locally and internationally to be able to productively use the block…Guyanese should be involved in the process. It is no use us having a local content law on petroleum and it is to enable Guyanese even in partnership with others to benefit and it is absolutely necessary that we should, Guyanese should be involved,” Patterson said.

It remains unclear how many offshore areas are due to be relinquished and returned to Guyana by oil companies but areas in the Kanuku, Corentyne, Demerara, Canje and the Kaieteur Blocks are expected to be up for auction.

The total areas to be auctioned also have not been made public. On the availability of remaining blocks, Guyana Geology and Mines Commission (GGMC) Commissioner, Newell Dennison, had in 2018, told this newspaper that from rough determinations, approximately 9,500 sq. km is available within the coastal environment, 24,000 sq. km within the environment of the continental shelf, 10,000 sq. km within the deep water environment and 9,000 sq. km within the ultra-deepwater environment. Most interest has been in the offshore area and particularly in the deep water environment following major discoveries there by ExxonMobil in 2015, putting the highly coveted Block C as the most sought after area.

Vice President, Bharrat Jagdeo recently said that the biggest variable influencing the determination of a date for the auction is “one about the fiscal terms” but that government was committed to ensuring locals participate and wants the citizenry to debate the pros and cons and give feedback.

Jagdeo said that the administration is cognisant that it will never be able to please everyone but would like to base its decisions on input from citizens on if they feel allowing Guyanese to invest in the process was for the overall good of this country.

The Vice President’s personal view is that Guyanese should participate and that requirements could be set to ensure that bids come from a group of individuals and that the blocks are not sold to persons barred from bidding or are not flipped immediately after. Flipping of ownership of blocks did occur in several questionable deals struck in the dying months of the PPP/C’s Ramotar administration in 2015.