Exxon announces US$4.4B Investment after Guyana grants licences

Jun 17, 2017 News

By Suraj Narine

One day after being granted a production licence by the Government of Guyana (GoG), US oil company ExxonMobil and its partners, are wasting no time.
The company, yesterday, announced its final investment decision (FID) which will see the company moving ahead with phase one of the Liza Development Project. This phase is estimated to cost US$4.4B.
The granting of the production licence was revealed by Guyana’s Natural Resources Minister, Raphael Trotman, during the 65th Sitting of the National Assembly on Thursday evening.
He was making a presentation on the government-proposed Petroleum Commission of Guyana Bill of 2017.
Trotman told the House that the permission to grant the licence, would have been based on the advice given by the “world-renowned experts” that reviewed the Liza development plan that was submitted by Exxon a little over six months ago.
The production licence would also come on the heels of the company obtaining an environmental permit for development from the Guyana Environmental Protection Agency (EPA).
The Liza Phase one development includes a subsea production system and a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels of oil per day.
“We’re excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment,” Liam Mallon, President of the ExxonMobil Development Company was quoted by Business Wire as saying.
“We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens.” The official was further quoted.
Potential for new phase
Meanwhile, the company also announced positive results from the Liza-4 well – which is still being drilled. The company said that it has encountered more than 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoirs, which will underpin a potential Liza Phase 2 development.
Exxon’s Senior Director of Public and Government Affairs in Guyana, Kimberly Brasington, told Kaieteur News yesterday that a similar process will have to be undertaken by Exxon should the company decide on moving ahead with phase two.
The Official said that a separate request for an environmental permit and production licence, will have to be submitted to the local regulatory bodies for their approval.
Brasington could not say what the Liza development in totality will cost, since according to her, ‘it’s too early to say’.
The Stabroek block is now estimated at 2 billion to 2.5 billion oil-equivalent barrels, which includes Liza and other successful exploration wells on Liza Deep, Payara and Snoek.
The Liza field is part of the Stabroek Block, which measures 6.6 million acres, or 26,800 square kilometres.
Esso Exploration and Production Guyana Limited is operator and holds a 45 percent interest in the block. Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent.
Drilling of the Payara-2 well on the Stabroek block is expected to commence later this month and will also test a deeper prospect underlying the Payara oil discovery.
Meanwhile, these developments are occurring against the backdrop of intense debate.
It was reported that Guyana will receive a royalty of two percent on gross earnings and 50 percent of the profits from the sale of petroleum once production commences.
This arrangement that was brokered, has not been sitting well with several sections of society. The Main Parliamentary Opposition – the People’s Progressive Party /Civic (PPP/C) has been very vocal over the arrangement despite, the party in Government would have inked the initial exploratory agreement with the company a little over a decade ago.
Also, there have been calls for the agreement to be made public. However, Government has responded saying that there are secrecy clauses entailed in the agreement.
The issue of local content is another component of the emerging oil and gas sector that is generating debate.
A draft of the policy is currently being reviewed with recommendations already submitted by several entities.
A public consultation on the draft policy was held at the Pegasus Hotel Georgetown, last evening.