Guyana has to pay for the feasibility study to be carried out by ExxonMobil to ascertain whether or not there is excess associated gas for the country to use for energy.
So far, only associated gas has been found in Guyana. The other type of gas is non-associated.
Associated gas is gas that has been found in oil wells, while non-associated comes from reservoirs that are not connected with any known source of liquid petroleum. It is also called “dry gas.”
Guyana’s contract with ExxonMobil gives the American giant first jump. It states that the associated gas produced from any oil field within the contract area shall be with priority, used for the purposes related to the operations of production and production enhancement of oil fields, such as gas injection, gas lifting and power generation.
The contract further states, “With no impediment to normal production of crude oil, a plan of utilization of the associated gas shall be included in the development plan of each oil field. If there is any excess associated gas in the oil field after utilization pursuant to article 12.1(a) the contractor shall carry out feasibility study regarding the utilization of such excess associated gas of such oil field”.
The contract says that the Contractor’s feasibility is supposed to be submitted with the development plan. However, it gives ExxonMobil time to submit it after. The contract states that the study shall be completed no later than five years following the submission of the Development Plan. Exxon has to provide the Ministry with regular updates on the progress of such feasibility study then, upon completion, the said study shall be submitted to the Ministry and the Guyana Geology and Mines Commission.
The contracts states that “all costs and expenses incurred by the Contractor in the production, use and/or disposal of the Associated Gas of an Oil Field as stipulated in Article 12.1 and those incurred in carrying out any feasibility study on the utilization of the excess Associated Gas shall be charged to the Development Cost of the Oil Field and shall be Recoverable Contract Costs.”
However, “all costs incurred by the Government for the infrastructure and handling of excess Associated Gas which are not included in an approved Development Plan shall be at the sole risk and expense of the Government and will not affect the amount of Cost Oil and Profit Oil due to Contractor.”
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