By Kemol King

GEORGETOWN, Nov 21 (Reuters) - U.S. oil major Exxon

Mobil ( XOM ) and partners have pulled out of negotiations with

Guyana's government on terms for exploring and developing a

shallow-water oil block, the South American country's vice

president said on Thursday.

Exxon, U.S.-based Hess and China's CNOOC

won offshore block S8 in a bidding round launched in late 2022

by President Irfaan Ali's administration in a move to diversify

Guyana's energy industry.

The companies had been engaged this year in negotiations for

the non-fiscal terms of the project, according to Exxon and

government officials.

"Exxon pulled out," Vice President Bharrat Jagdeo told

reporters in a briefing. "They wanted to use the area for carbon

capture and storage, and we don't want to do that at this

stage."

Partners Hess and CNOOC also withdrew from the talks,

Natural Resources Minister Vickram Bharrat said.

Exxon, Hess and CNOOC did not immediately reply to

requests for comment.

Eight of the 14 oil and gas blocks Guyana offered in the

round received bids, including by large companies such as

Petronas, CNOOC and TotalEnergies.

The government said last month that TotalEnergies, Qatar

Energy, Petronas, Cybele Energy, Delcorp and International Group

Investment have

reached agreements

with Guyana over terms of production sharing deals; and

added that an agreement for Exxon's area was "under review,"

without elaborating.

The auction was organized to expand Guyana's energy

industry. But as the Exxon consortium quickly ramps up output,

which has increased to some 660,000 barrels per day (bpd) only

five years after inauguration, the group continues controlling

all production in the country.

Earlier this week, neighbor Suriname announced Exxon had

withdrawn

from offshore block 52, one of the most promising oil and

gas projects in the country, leaving the area entirely to

operator Petronas.