Home Commodities Venezuela reiterates opposition to Guyanese offshore oil block grants

Venezuela reiterates opposition to Guyanese offshore oil block grants



Guyana received bids for six projects

Venezuela claims violation of international law

Guyana’s Liza crude fetches growing premium

The Venezuelan government rejected the bidding round for oil blocks carried out by the government of Guyana in maritime areas pending delimitation between both countries, according to an official statement published by the Ministry of Foreign Affairs on Sept. 19.

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“The Government of Guyana does not possess sovereign rights over these maritime areas and consequently any action on its boundaries is in violation of international law, as long as they are not carried out through an agreement with Venezuela,” the Venezuelan government said in the statement.

“Venezuela reiterates that it is unacceptable, and in violation of its sovereign rights, any illicit and arbitrary concession that Guyana grants, has granted or intends to grant in the areas in question, and warns that these actions do not generate any type of rights to third parties participating in said process,” the government added in the statement.

The Government of Guyana has received bids for six of the 14 oil blocks, according to previous reports.

The president of Guyana said Sept. 13 he was “not disappointed” by the meager turnout for bidding in the country’s first-ever auction of offshore oil blocks Sept. 12, in which just six consortium bids were received for a total offering of 14 leases, according to previous reports.

“Let us be very open and factual about this: We went out to auction at a time when major economies are saying to oil producers, we’re not going to finance you,” Mohammed Irfaan Ali said in a presentation at Inter-American Dialogue, a Washington- based international affairs think tank.

On Dec. 9, 2022, Guyana’s Ministry of Natural Resources (MNR) launched the Guyana 2022 Licensing Round, which offers 14 blocks for bidding in shallow water and deepwater areas.

The round builds on the success of recent E&P activity in Guyana that has led to the discovery of more than 15 billion barrels of oil equivalent since the Liza discovery by ExxonMobil in 2015, according to previous reports.

Liza crude has been increasingly valuable lately climbing to a Platts-assessed $2.12/b premium to Brent on Sept. 18, steadily higher from a 25 cents/b discount to Brent on Jun. 28, according to S&P Global Commodity Insights data.

Hess and ExxonMobil unveiled their latest discovery at the prolific Stabroek block offshore Guyana April 26, adding to their more than 30 existing finds in the country and to the 11 billion-plus boe of resource already banked, and also setting the stage for potentially another oil development in the South American country.

Venezuela and Guyana have maintained unresolved territorial disputes and delimitations of territorial waters for decades.

Guyana has been quickly monetizing its oil assets, with two producing oil developments, a third about to come online in October, and two others under construction. A development plan is also being forged for a sixth project, which could be submitted to the government by year’s end.

Guyana’s oil production is expected to hit 571,000 b/d by the end of 2024, according to S&P Global Commodity Insights.

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