“…You know companies always want to go quick because they want to monetize their discoveries (but) governments have to remind themselves that they can take measures to slow the pace if they need to, and there are different ways of doing that without leading the investors to leave the country or to decide not to invest…”
By Kiana Wilburg
Finding the right pace of development for the more than eight billion barrels of oil and gas resources in the Stabroek Block is an important issue that must be properly addressed by the relevant authorities, but it cannot be done in isolation, says Chatham House Associate Fellow, Dr. Valerie Marcel.
According to the Petroleum Governance Expert, the question of how fast or slow Guyana wants to develop these resources needs to be the subject of a national discussion.
Dr. Marcel made this assertion during an interview she had with Kaieteur Radio on one of its programmes called, Guyana’s Oil and You. There, she was asked to speak on the importance of Guyana having a depletion policy. She was keen to note that the topic is a very contentious one while showing that different countries have varying approaches to it.
In Uganda, for example, the Petroleum Industry Expert shared that the authorities there have taken things very slowly in terms of how they handled discoveries and move towards development because they wanted to make sure they had everything in place on their side to be able to oversee it most effectively.
Dr. Marcel said, “But there have been criticisms also of Uganda’s slow pace because investors have not been happy to wait so long to monetize their discoveries and also the government has had to wait much longer for production revenues.”
As for Ghana, the Chatham House Associate Fellow noted that development of resources found in the Jubilee Field moved very quickly and it was lauded as a well run process. With hindsight however, Dr. Marcel pointed out that the officials in Ghana have said that mistakes were made and they could have probably done it better if they had slowed it down.
“But there is the urgency of development needs sometimes that pushes government to go quicker. And you know, you have a very small government budget and the prospect of new production revenue, that’s a legitimate reason to go quicker as well. I don’t have the answer but it is an important issue to discuss though,” the industry expert said.
Dr. Marcel added, “…You know companies always want to go quick because they want to monetize their discoveries (but) governments have to remind themselves that they can take measures to slow the pace if they need to, and there are different ways of doing that without leading the investors to leave the country or to decide not to invest…”
The Energy Department Director, Dr. Mark Bynoe has said that Guyana will have to wait until the March 2020 General and Regional Elections are over to have a Depletion Policy in place.
In the meantime, Dr. Bynoe said Depletion Policy Guidelines were completed since December last and submitted to the Inter-American Development Bank (IDB) which funded the exercise.
It was in early 2016 that talks emerged about the need for Guyana to have a depletion policy. Trinidadian Energy Expert, Anthony Paul would have cautioned in a previous interview that if Guyana wants to lengthen the life of its oil industry, then it urgently needs to put this policy in place.
In the absence of this crucial document, ExxonMobil and its partners, Hess Corporation and CNOOC/NEXEN, are steaming ahead with plans to extract Guyana’s oil as quickly as possible from the Stabroek Block. In fact, the International Monetary Fund (IMF) has said that ExxonMobil would be introducing five Floating Production Storage and Offloading (FPSOs) into the Stabroek Block, by 2025.
The first FPSO, Liza Destiny, has been in operation since December 2019. The second FPSO, Liza Unity, is projected for hook up by 2022. The FPSO for Payara has a 2023 deadline. The IMF noted that a fourth FPSO would be in Guyana’s waters in 2024 with the fifth vessel hooked up in 2025.
In a special report prepared for Guyana’s authorities, the IMF said that bringing five oil production projects on stream in five years is “unprecedented.” It said that if this were to be realized, Guyana would reach one of the highest ratios of oil daily production per capita in the world.
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