Latest update April 17th, 2024 12:59 AM
Aug 23, 2021 News
…Despite Guyana’s inability to meet Liza I demands alone
Kaieteur News – Despite Guyana’s inability to meet the challenges of regulating and managing the operations of the Liza I oilfield in the Stabroek Block alone, Vice President Bharrat Jagdeo believes the government cannot stop the pace with which the ExxonMobil led consortium oil companies are developing the Stabroek Block in order to build its country capacity to manage and monitor the industry effectively.
This, according to Jagdeo, who on Tuesday was asked about the country’s preparation to manage the industry effectively in light of the rapid pace of development taking into account the country’s limited legislative and other regulatory capacities.
ExxonMobil Guyana has to date made some 21 successful discoveries in the prolific Stabroek Block Offshore Guyana already confirming in excess of nine billion barrels of oil equivalent crude with ongoing appraisals expected to increase that amount.
The company announced its first discovery in 2015 and four years later in 2019, began producing oil from the Liza I offshore field utilising the Liza Destiny, Floating Production Storage and Offloading (FPSO) vessel.
Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—has since that time boasted of its record pace developments in the ultra-deep offshore Stabroek Block and since received approvals for the setting up of two more oil fields—the Liza II development and the Payara.
The Liza II development will be utilising the Liza Unity FPSO currently undergoing its final installations in the Keppel Shipyard in Singapore before setting sail for Guyana before year end where it will be hooked up to the subsea connections for official start up early next year.
The third development—Payara—is also currently being developed with its FPSO Hull currently at the same Singapore shipyard for its topsides installation.
Plans for a fourth development—Yellowtail—is considerable advanced.
To this end, the Vice President was adamant; the growth of the industry cannot be stopped simply to build capacity as a country, since in his opinion, the two can be achieved in tandem with each other.
According to Jagdeo, “for a small country that is moving at the pace at which it is moving, it takes a bit of doing, so we have local people but we are also importing some of the capability and the capacity to do this, we can’t stop the growth of the industry to do this, we have to do it in tandem with the growth of the industry.”
To this end, the Vice President noted that as part of the country’s capacity building process, “we have to reform the legislation, the Petroleum Act in Guyana was passed in 1986, now we are busy working to ensure we have a modern petroleum act.”
Additionally, the Vice President divulged that as it relates to “the Petroleum Commission, hopefully by the end of this year, early next year, Parliament comes out of recess, we are going to go with legislation on the Petroleum Commission.”
As it relates to the nation’s natural Resources Fund commonly referred to as its Sovereign Wealth Fund, the Vice President reiterated this “has to be improved, we have to make it more arm’s length, we were critical of it when we were in opposition.”
He qualified his position explaining that the fund is currently not structured in a way where it keeps the politicians away in an arm’s length from the management of the resources, “that has to evolve into a model similar to the Norwegian model not identical.”
According to Jagdeo, the country is busy building the management architecture and regime, in addition to strengthening the Environmental Protection Agency, and that “all of this is done not to penalise the sector but to ensure we have predictable regimes.”
He spoke to the need for predictable fiscal regimes through and updated production sharing agreement and acknowledged that the country has “had some criticisms of that too, Guyana did not get enough in the first one we sign, so we make sure that we are going to improve that.”
He said that as it relates to the safety, regulatory and environmental aspects, the revamps are meant to ensure that “the company know what they can expect and this is good because it helps them too for planning purposes and it helps the country to safeguard its asset …we are in the process of dealing with it all.”
To this end, he reaffirmed, “we can’t stop the growth of the industry to do this; we have to do it in tandem with the growth of the industry.”
The reality on the ground however exposes Guyana’s glaring capacity deficiencies as was recently highlighted by the Inter-American Development Bank (IDB), Country Manager Sophie Makonnen.
The IDB Country Manager in an interview with this publication had said, “…I know that people are worried and I understand. I understand how the world works and why they are worried. But there has been, maybe not enough work done. I think that the next two or three years is critical. The pace to prepare has to speed up. It cannot be what it has been in the last one to five years. It had to speed up.”
Asked to say why she highlighted the next two to three years as critical, Makonnen posited, “I am just looking at the cycle of when the other oil fields are coming in, cycles of development, political cycles and all of that. So I am saying that it cannot take 10 years to get ready. You can’t…It took a long time to get Guyana where it is in terms of what has been done and there’s still a lot to do. So you cannot take another five years to continue.”
The IDB has been one of Guyana’s key partners in developing its capacity to manage the oil sector.
To this end, it has given Guyana several loans, one of which included strengthening the Technical Functions of the Department of Energy.
This was approved on December 17, 2019 and totaled US$ 606,062.
The objective of this project is to provide immediate support to operationalise protocols for management and compliance monitoring of the Stabroek Block Production Sharing Agreement (PSA) through improvements in general monitoring and enforcement standards during administration procedures, production control and verification processes.
It is also intended to provide general training and support to key agencies within the oil and gas regulatory framework with specific attention to the use of the contract management systems; and provide a platform for the dissemination of best practices for software solutions for compliance monitoring and for operating requisite internal control systems to maintain data integrity and accuracy in the sector.
JAGDEO ADDING MORE DANGER TO GUYANA AND THE REGION
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