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“I bet my career on Guyana” — Former Hess executive
Kaieteur News– Tim Chisholm, former vice president of exploration for Guyana and Suriname at Hess, has bet his entire career on Guyana’s Stabroek Block.
Tim Chisholm, former Hess vice president of exploration for Guyana and Suriname
That’s according to Kevin Crowley in a Bloomberg article, “The Secret Story of How Exxon Mobil Gained a $1 Trillion Oil Fortune That 30 Rivals Passed Up.”
Chisholm had reportedly studied Venezuela for Exxon in the 1990s, while Pablo Eisner had worked in the region for Repsol SA. Both wanted a piece of the Stabroek action, but when that wasn’t feasible, they led Apache into Suriname. Before they drilled, Apache management changed its mind and cut the exploration team. Chisholm and Eisner were fired within half an hour. Chisholm went to Hess, and Eisner joined CNOOC. Both said they felt they had unfinished business.
Having struck a secret deal for the Stabroek block before oil was discovered, ExxonMobil quickly set up a data room at its Greenspoint office in Houston and invited about 30 oil companies. Only about 20 oil companies showed up, and geologists from each stakeholder listened to a full day of presentations from the Exxon team and analyzed the data the next day.
Hess was the last to go. Chisholm grilled the Exxon team for more than two hours. “(They) did a very good job, I would say, without overselling themselves,” Chisholm said in a 2020 speech. “That was critical to me believing this. (They) were passionate about it.”
In mid-2014, Shell dropped the bombshell that Hess was considering entering the block after paying for six years of seismic data. The company said in response to questions that the decision was “part of a broader group-wide review of our frontier exploration portfolio.”
Shell’s decision gave ExxonMobil 100% of Stabroek, just weeks after it had to inform the Guyanese government if it planned to drill. In Hess’s view, Guyana was a difficult situation to accept, but the company agreed to a 30% stake. “I’m betting my career on this,” Chisholm said, adding, “If it doesn’t work, I’m definitely going to be fired.” It is worth noting that today the Stabroek block produces more than 600,000 barrels of oil per day from just three projects (Lisa I, Lisa II and Payala). ExxonMobil controls blocks with 11 billion barrels of recoverable oil, worth nearly $1 trillion at current prices.
In addition, Eisner, who had coveted Guyana since working with Chisholm at Apache, was now working for CNOOC.
“Everyone was invited to Stabroek, but you needed a maverick, a confident geologist who would bang the table and say, ‘This is great,’ ” he said. “At CNOOC, I was that guy.” Eisner convinced his boss, and CNOOC took a 25% stake.
ExxonMobil Guyana Limited’s stake in Stabroek now stands at 45%, but crucially, the two new companies have agreed to cover the bulk of the drilling costs. ExxonMobil’s own capital is now largely protected, and management has given the go-ahead to drill Liza.
By 2015, the oil companies had discovered oil and the following year signed the now much-criticised unfair agreement that benefited the oil companies more than the state. The production sharing agreement (PSA) for the Stabroek block was signed in 2016 by former Natural Resources Minister Raphael Trotman, who served in the APNU+AFC coalition government.
The 2016 agreement brought Guyana an industry-low 2% royalty. Currently, Guyana shares revenue with ExxonMobil, which deducts 75% of the costs incurred to develop the resources in the Stabroek block. The arrangement lacks earmarked protections, and Guyana will pay for projects that have not yet started production activities.
Each monthly bill for future production development projects is added to the list of expenses that ExxonMobil has to recover. After deducting 75% to repay the oil company, Guyana splits the remaining 25% of profits with ExxonMobil. This is equivalent to 12.5% of operating profits.
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