Latest update April 25th, 2024 12:59 AM
Nov 21, 2021 News
Dear Reader, in light of the economic impact caused by the COVID-19 pandemic, our publisher, with you in mind, has taken the decision to extend our weekly review of some of our major stories in their entirety.
…says it’s not a matter of if, history proves accidents happens
Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—on Thursday last held its final public scoping exercise online, to inform the preparation of the company’s Environmental Impact Assessment (EPA) Study—an exercise that glaringly exposed its inability to provide specific answers to queries and concerns raised.
The exercise saw participation from stakeholders locally, regionally and internationally, including Gary Aboud, founding member of the Trinidad and Tobago (T&T) Fishermen and Friends of the Sea (FFOS). He told the panelists including the facilitators—the Environmental Protection Agency (EPA)—that they are prepared to litigate against ExxonMobil Guyana, if their demands are not met in writing, in the EIA to be prepared.
Accusing the panelists of attempting to hoodwink the stakeholders as it relates to the emergency preparedness in the event of an emergency, Aboud, in raising his concerns with the EEPGL panel, iterated that the scoping exercise being conducted is for “a Caribbean audience who are concerned when we speak about oil spills.”
Hoodwink
He said, the concerns are credible as it relates to what obtains when a spill occurs and lambasted the EEPGL official that contended, “we have great facilities and capacities to prevent it (oil spill) from even occurring.”
According to the FFOS founding member, “I want to state on record strong objection to hoodwinking the question about preparedness for when they occur, because I am not aware of a single oil company on the planet which have not had accidents and spills.”
Adamant in his assertions, Aboud told the ExxonMobil and EPA panelists, “when the professionals on the panel chats to us—and no disrespect—real nonsense, to say that no, no, no we won’t have any (oil spills), I wish I could put his daughter’s life on the line with that promise because he wouldn’t, because accidents occur.”
According to Aboud, the preparatory planning and the EIA, “cannot hoodwink the concerns that we are raising,” and pointed to the fact that in neighbouring T&T “we probably have the world record for an island, with not many installations, but quite a few, we have reported in excess of 100 spills per year.”
To this end, Aboud used his opportunity to address the panel, to articulate, “my questions are based on the fact that accidents occur, and I don’t want no professional with a wonderful accent and a long list of professional accreditations to tell me no, we are prepared it won’t occur, because history proves otherwise.”
Reflecting on the likely impacts on the region in the likelihood of an accident, Aboud stressed “these are very real and will occur and are occurring already.”
Fishery and Insurance
Addressing the fishing industry directly, he related that at present on the east coast of T&T, “we have a crisis where our government” agreed to conduct tests on the fishing population.
The tests he referred to, relate to obligations under the Minamata Convention on the use of Mercury.
As such, he pointed out that the convention requires the testing of fish for heavy metals and other contaminants pointing to the fact that fish migrate, are exported and also sold commercially.
To this end, he pointed out that on the east coast of Trinidad where tests were conducted specifically for mercury, “we found that five of the six fish commercially sold in T&T contained mercury five times higher than the world health limit for the consumption of fish.”
This, information, he said, was covered up by the T&T government and is not an isolated case.
“What we could not understand and what we were disturbed about, is why would the government deliberately smother the report that exposed the risk to public health of contamination that may have occurred in T&T or maybe partially responsible was the waters that come from the Orinoco and other areas where Guyana and Guyanese are using mercury in gold extraction.”
According to Aboud, “there is a history of cover ups in the Caribbean; we have instances of 12 such.”
Manipulated and Bullied
To this end, the FFOS founding member told the panelists “what we are saying in T&T is that for us to accept and endorse and welcome you into our territory of the Caribbean region, you need to respond to our questions and don’t hoodwink us and tell us, no we are prepared.”
As such, Aboud demanded of ExxonMobil, “I would like the EIA to include a listing of the emergency response preparedness training for Guyanese professionals working in that industry and with this company.”
Additionally, “we would like to see included in the EIA, the list and cost and the arrivals of the emergency response preparedness equipment.” This, he said is, “recognising that this equipment, as we saw with the (Deepwater) Horizon spill, was woefully inadequate.”
The T&T stakeholder, as such, told the panelists, “I am requiring and requesting that before any approval is granted in our waters, in our fishery, in our tourism sector of which we depend on, that we need to know exactly what is the emergency response training preparedness and equipment preparedness available”
Qualifying his position further, Aboud noted that while in Trinidad and Tobago “we do in fact have, next to Belize, the most evolved environmental legislation which is very stringent it still fails.”
According to Aboud, this obtains, since while stringent legislation exists on paper, the implementing regulatory agencies are manipulated and bullied, and, “in Guyana it’s a lot worse.”
He used the occasion to also point out that with an operation some 200 miles offshore, “we have to depend on the regulatory agencies and the Ministers of Guyana, which I don’t have any confidence in—with no disrespect—because of our experiences of manipulation in T&T.”
Aboud was adamant however, that the EIA must include the commitments in writing by the company itself.
This, he said, is since “I know everybody (oil players) loves their family and their wives but they don’t love us …so we are willing to litigate if the promises are not written and fair.”
Expanding on the likely litigation if the demands are not met, Aboud noted that it would seek in the first instance, to stop the capacity of this approval because of the endangerment of the Caribbean.
Well Blowout
Additionally he noted that litigation could also be filed “to claim for damages if they fail to commit to their promises in the EIA.”
He was adamant, “if you don’t then some of us are willing to go the distance to ensure that this project does not continue and that if it continues it must only continue with the direction and discretion as approved by the court.”
On the matter of insurance, Aboud said, “I would like to see whether there is trans-regional insurance to cover for the tourism sector.”
According to Aboud, “I think that it is critically important, for the fisheries sector of which in T&T we have 50,000 dependents. I am thinking for bio-diversity loss. I have never heard of insurance for bio-diversity loss, and particularly and additionally I would like to see in the EIA what policy is specifically in place for transnational waste when it crosses borders.”
Speaking to the need for commitments such as adequate insurance and emergency response, Aboud posited, “100 years from now you and your shareholders will be long gone. Happily enjoying the benefits of the extraction but we will be left with the responsibility, so I would like to see in the EIA what is the long term emergency response capacity and who bears the cost for accidents that occur long after the well is decommissioned.”
He had cited a recent incident in T&T where there was a well blowout—a blow that occurred some 42 years after the well had been capped.
That incident he said, left T&T with the cost to bear in an operation that eventually cost a life in addition to the cash expended, since there was no documentation for the decommissioned wells.
MONDAY
Failure to audit Exxon’s US10B bill…
Public servants lose 66 years of double pay
…stakeholders ramp up criticisms of government’s dereliction of duty
Amid mounting criticisms of the Government’s failure to audit the US$10B expenses by ExxonMobil for the Liza I & II projects, Kaieteur News Publisher, Glenn Lall has estimated that the money forfeited could have doubled public servants’ salaries at its current rate for the next 66 years.
This likely lost income is linked to a provision in the Production Sharing Agreement (PSA) which gives the government a chance, through periodic audits, to reclaim excessive spending by Exxon and its partners. This provision was to ensure that Guyana could get the maximum benefits out of its contract with Exxon. In other words, it was a safety valve for the financial protection of the people of Guyana. Government had a duty to use the safety valve when needed.
Lall, a businessman of several decades and who has been at the forefront of a campaign admonishing more robust monitoring of the oil and gas sector so that Guyana can get its fair share of the oil profits, was the first person to have flagged the issue regarding the unaudited spending, after Vice President Bharrat Jagdeo at a recent news conference admitted that his government dropped the ball. “We received almost 10BUSD in costs for the Liza I & II projects, this money should have been checked, double-checked and rechecked a million times within the two year time frame set out in the contract, and if it was not checked within that time frame Guyana will have to accept and pay every single cent, as is,” Lall said in a recent radio commentary on Kaieteur Radio.
Who will miss such a deadline?
“Now we are being told by the man himself, our VP, that the deadline has passed and we missed the boat so Guyana will have to foot that bill, that 10BUSD bill.” The newspaper published asked: “ Who on earth would miss a two year deadline to check a bill coming from people you know you can’t trust with one dollar, much less 10BUSD? You know of anyone…?”
Opining that at least half of the US$10B bill presented by Exxon was overstated, Lall said that US$5B is equivalent to two and a half years of Guyana’s Budget. “Let me break it down more simple for you, with that 5BUSD Guyana didn’t have to go prostituting itself to any bank to get $100B for the next 50 years, that’s the kinda money we get [cheated] on because we didn’t check, these clowns let the time run out.” 0
He mentioned that Guyana was spending $15B to pay public servants this year. “…had these clowns checked and managed to save half of that US$10B, public servants salaries could have been doubled now, to the next 66 years with that money alone, and if you lessen the years you can increase the salary more as the years go by, and that is also factual what I am saying here.”
Lall noted that every year the nurses, the teachers, the police, the soldiers, and public servants in general could have been benefiting from a double and triple increase in their salaries. “That’s the kinda money we lose out by not checking that US$10B and Jagdeo, Ashni Singh, Winston Jordan or any accountant can do the math to prove me wrong, Lall asserted. “Not checking those bills is what has left us in this situation where we would have to continue to borrow every year to give public servants a salary increase…”
During his latest press engagement Jagdeo told the nation that government is disappointed that it has not been able to push through with these critical post-2017 audits.
Expounding further, the Vice President said, “We have been very disappointed that we have not been able to select a group to do the audit of the post-2017 expenditure by Exxon. The reason is that we didn’t have strong local content. We had two groups, two local groups that came in but they were not strong enough. We want to build the capacity in Guyana to do this audit. We think that our people have enormous skills, forensic skills and auditing capacity.”
The former President added, “…we’re looking to see if we can’t have an arrangement where we have a consortium of our local people to come together to do part of this work while working alongside an international group…”
Jagdeo said he has since asked the Natural Resources Minister, Vickram Bharrat to examine the possibilities of getting together, all of the groups from Guyana which have an expressed interest in working with a foreign company on this front. He said this is the preferred option as the country desperately needs to increase its auditing capacity and competencies.
Casual and callous
Reacting to Jagdeo’s comments Lall said the VP was very casual and callous in addressing the issue. “Hear what he told the nation…listen to his excuses and how he presented it to us, as if this is candy money or snow cone money we give away.” He continued: “Not even a joker would allow a clown to spend money which has to come out of his pocket and that is what the VP Jagdeo telling us. This man run this country 12 years as President, now he is heading this trillion USD oil sector and telling this nation that he disappointed for not checking 10BUSD spending, knowing there is a time limit to do so.”
Mocking Jagdeo, Lall said: “But hear what this financial guru Bharrat Jagdeo telling us, he is disappointed that the time lapsed and he didn’t have people to verify 10BUSD, like I said if you were cheated US$5B , that money is 2 ½ years Budget gone down the drain, it means everything we are doing in Guyana could have been doubled for the next 2 ½ years, if you had to patch one road you could have patched two; if you had to fix one bridge, you could have fixed two… man everybody salaries could have been doubled too, with just that US$5B.”
Criminal dereliction
In addition, to Lall several other stakeholders have criticised the government’s handling of the matter. Canadian-based Guyanese, Dr Jerry Jailall in weighing on the matter said Guyana’s failure to audit Exxon’s US$9.5B spending is tantamount to the Government aiding and abetting the fleecing of Guyana’s resources. As such, he was adamant, “the sin of omission of failure to do audits is as bad as the sin of commission of wrongdoing,” and that “no excuse can absolve the Government of this grave sin against the nation.”
According to Dr. Jailall, “this is not Exxon doing it to us. This is our own Government doing it to us.” He suggested that Guyana, at the beginning of its oil journey is already manifesting the “resource curse” syndrome.
Dr. Jailall qualified his position by drawing reference to the fact that the ongoing Public Accounts Committee’s hearings “are all about how the country’s monies are being misspent and there is poor accountability, poor record keeping, missing receipts of transactions and payments running into hundreds of millions of dollars, and at the end of the hearings, nobody is going to jail for the unaccounted millions.”
He pointed also to “poorly equipped hospitals that kill our loved ones, dialysis treatment is unavailable in most of Guyana, most of our village roads are mud roads still, our schools are primitive, internet services are unavailable or poor in most of Guyana, and we have a long list of urgent needs.”
56 years of personal income tax
For his part, Opposition Member of Parliament and Shadow Minister for Legal Affairs and Attorney General, Roysdale Forde described the situation as a massive financial failure that reflects a dereliction of duty. He said the money forfeited could have paid the personal income tax of all Guyanese for the next 56 years. Moreover, he is calling for “an independent investigation into this colossal act of incompetence.” Commenting further, Forde said that the incumbent People’s Progressive Party Civic (PPP/C) administration, “opted to let US$9.5 billion or G$1.8 trillion go, than to entrust a high-valued job to ‘not so strong’ local auditors.”
Forde added, “not only is this disclosure pathetic but it shows Jagdeo’s lack of confidence in the skilled persons of this country and the contempt that he and the PPP/C have for Guyanese as a whole.” As such, he posited, “local auditors must feel like peons (unimportant) knowing what Jagdeo and the installed PPP/C administration think of them.”
According to Forde, “it is stunning to see that it was better for him, who has no auditing skills, to let such a potentially large sum of money be forfeited with the added loss of an opportunity for local auditors to learn on the job.” The situation, he observed, comes “in a time when the cost-of-living is rising and families are hurting” and lamented, “it is amazing that the country is willing to accept a reckless decision.” A decision he said, that would potentially let “G$1.8 trillion go down the drain; with such wanton disregard for the financial needs of the people, this installed government is showing its true colours of having no real interest in working in the best interest of this country.”
Chartered Accountant Christopher Ram commenting on the issue in the Stabroek News flayed what he described as government’s “nonchalant attitude.” He said the administration could have asked Canada for help, if indeed there was a problem sourcing competent local auditors. “And if the Government was so interested in auditing those costs, it could have called on the Audit Office, which has easy access to Canada and its wealth of experience in petroleum audits, to provide assistance, even as a short-term measure,” Ram was quoted as saying in the Stabroek News.
TUESDAY
Exxon Report Reveals…
US$900M gas-to-shore, oil projects will significantly impact marine resources
While the Peoples’ Progressive Party Civic (PPP/C) Government appears preoccupied with the revenues to be had from various ExxonMobil-led projects, a key report from the American multinational has warned that there will be significant impact on the nation’s marine resources, due to the cumulative impact of those oil related activities.
This disclosure was made in the project documents for the Yellowtail development in the Stabroek Block, operated by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
The report which formed the premise for the recently concluded countrywide consultations on the Yellowtail development, noted that there are several exploration and development activities planned or are already in operation by EEPGL.
These include the US$3.5B Liza Phase I Development, the US$6B Liza Phase II Development, and the US$9B Payara Development projects.
EEPGL said, it is continuing with a rapid exploration drilling programme in the Stabroek Block alongside works on its fiber optic cable installation project, an onshore Guyana Office Campus, and the US$900M Gas to Energy Project.
It is also poised to drill 24 wells across the Kaieteur and Canje blocks which border the Stabroek concession.
Additionally, EEPGL said there are three other oil and gas operators that are planning exploration programmes in blocks adjacent to the Stabroek Block.
With this in mind, EEPGL said its planned together with the other operators could cumulatively, have a significant impact on some resources.
It said, these impacts include but are not limited to, air quality and climate via increased emissions of greenhouse gases and other pollutants, marine water quality via the discharge of drill cuttings and associated increases in other water borne articles, special status fish via changes in distribution due to altered water quality, special status seabirds via attraction to offshore facilities or disturbance from project activities, marine mammals via vessel strikes, special status marine turtles, “marine fish via degraded water quality”, riverine mammals via behavioral changes or displacement as a result of increased vessel traffic within Georgetown Harbour, and ecological balance and ecosystems via introduction of invasive species via ballast water discharges.
It said too that the oil related activities will result in changes in marine nutrient cycle, resulting in localized and temporary changes in phytoplankton (a type of microalgae) species distribution, and impacts on gene flow.
In spite of the foregoing, EEPGL said citizens and local authorities ought to be assured that the project will adopt a number of embedded controls, mitigation measures, and management plans.
The ExxonMobil subsidiary said, these are considered sufficient to address the contributions of the project to cumulative impacts.
According to project documents, the Yellowtail Project is expected to cost Guyana over G$1.8T.
It is expected to consist of drilling approximately 41 to 67 development wells, including production, water injection, and gas re-injection wells; installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and the operation of a Floating, Production, Storage and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
Initial production is expected to begin by the end of 2025 or early 2026, with operations continuing for at least 20 years.
The project is expected to employ up to 540 persons during development well drilling, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
Over the last two weeks, the Environmental Protection Agency (EPA) has held several meetings with stakeholders to explain the workings of the project. These discussions were started after the nation had a mere 10 days to digest over 7000 pages of technical data on the project.
Today is the last day for persons to submit any commentary on the project to the EPA.
Govt. courting Middle Eastern group for agricultural investment
The Ministry of Finance disclosed Monday that it hosted a meeting with senior officials attached to Elite Agro LLC, one of the United Arab Emirates’ (UAE) leading companies in the growing, sourcing, importing and marketing of agricultural products.
The meeting was held with Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh and Chandra Pratap Singh, Business Development Director and Emil Moukarzel, Chief Operating Officer (CEO) of Elite Agro LLC.
The engagement served as a follow-up to earlier meetings held between President, Irfaan Ali, and officials of Elite Agro LLC.
It also forms part of the President’s implementation strategy for the diversification of Guyana’s non-oil sector.
During the meeting, Minister Singh explained to the officials of Elite Agro LLC that traditionally, agriculture has been an extremely important anchor in Guyana’s economy while adding, that it is the government’s intention to ensure it remains an important anchor in the non-oil economy. He also indicated that with Guyana looking to expand its agricultural sector there are currently, two big streams of opportunities available to Elite Agro LLC, either to be a direct investor or to facilitate trade in agricultural commodities to other export destinations.
“Guyana has vast expanses of very rich and fertile land for agriculture. We have been for a long time a large-scale producer for specific agricultural crops such as sugar and rice, but we are now exporting a number of other commodities which are ready for large-scale cultivation, and other crops that are poised for rapid expansion as well. We also produce a wide selection of livestock and meat for consumption,” Dr. Singh pointed out.
Wrapping up the meeting, Minister Singh indicated that his Government alongside the private sector is aggressively pursuing investment as quickly as possible, as this will aid in expansion of Guyana’s economy as well as facilitate job-creation.
“We are a very stable environment, both politically and economically. Guyana is now a place where we are having conversations with all of the big companies of the world (and not just in agriculture) and this is a signal of how attractive we are for investment,” the Finance Minister concluded.
Accompanying the Finance Minister at the meeting were Ministers of Agriculture, Zulfikar Mustapha, Tourism Industry and Commerce Minister, Oneidge Walrond and Chairman of the Private Sector Commission, Paul Cheong.
Other private sector representatives included David Fernandes—head of a consortium dealing with the expansion of corn and soya-bean production in Guyana.
WEDNESDAY
Exxon signs ‘large’ contract for 4th project despite no approval
Despite the fact that the Guyana Government is yet to sign off on any of the required approvals or licenses required for the development of the Yellowtail oil field development in the Stabroek Block, ExxonMobil Guyana has inked a “large contract” for the subsea installations for that project.
The news was disclosed on Monday by TechnipFMC, which said it has been awarded a “large” contract by Exxon Mobil Corporation, affiliate, Esso Exploration and Production Guyana Limited (EEPGL), to supply the subsea production system for the Yellowtail development.”
According to TechnipFMC, “a large contract is between US$500 million and US$1 billion”
It was noted, however that “the full contract award will not be included in inbound orders, until the project receives final investment decision and government approvals.”
According to the company, “subject to government approvals and final project sanction, TechnipFMC, will provide project management, engineering, manufacturing and testing capabilities to deliver the overall subsea production system.”
It said, “…the scope of the project includes 51 enhanced vertical deepwater trees (EVDT) and associated tooling, as well as 12 manifolds and associated controls and tie-in equipment.”
To this end, Jonathan Landes, President, Subsea at TechnipFMC said, “We are very excited to continue our relationship with ExxonMobil through this award, which is our fourth within the Stabroek Block. We are proud of our dedicated Guyanese employees and are committed to the continued development and expansion of local capabilities.”
The news of the ‘large contract’ comes on the heels of recent reports that ExxonMobil Guyana was already in talks with SBM Offshore, the Dutch floater specialists that constructed the first two Floating Production Storage and Offloading (FPSO) vessels—Liza Destiny and Unity, in addition to the Prosperity currently being fabricated—for the company to construct the Yellowtail FPSO.
Those negotiations were being had even before the public scoping exercise had been completed.
That vessel is for ExxonMobil Guyana’s fourth and largest oil field development, which is to operate in the Stabroek Block at the Yellowtail site to comprise up to 67 wells—production and reinjection.
According to international reports, the talks include the potential for some future platform assembly in Guyana. This publication understands the discussions include potential made-in-Guyana requirements to build part(s) of future production units.
This according to a Reuter’s report, which attributed the sentiments to Vice President, Bharrat Jagdeo.
“We are hoping that more and more of the components could be fabricated in Guyana,” Jagdeo said.
It was noted that the deal for the fabrication of the latest FPSO could be had within six months.
Netherlands-based SBM Offshore had been awarded Exxon contracts to build Guyana’s first three FPSOs, namely the Liza Destiny for the Liza I Oil Field, the Liza Unity currently being hooked up to the subsea installations, while the third development, Payara is well underway.
That oilfield will be produced using the FPSO—Prosperity—another of the production vessels that ExxonMobil had proceeded with constructing, even before receiving government’s approvals.
The company has, in recent years, been coming under increasing public scrutiny and receiving criticism over its high-handed approach towards projects in Guyana with negotiations being done for project costs to be recovered from oil revenues, and for which Guyanese authorities have little to no input.
Outside of its inability to audit the expenses for the Liza I&II, Guyanese authorities have also been coming under increased scrutiny concerning their dealings with ExxonMobil Guyana, as highlighted during the final scoping exercise to inform the crafting of the Environmental Impact Assessment for the Yellowtail Development.
To this end, the exercise saw participation from stakeholders locally, regionally and internationally, including Gary Aboud, founding member of the Trinidad and Tobago (T&T) Fishermen and Friends of the Sea (FFOS) group.
He told the panelists including the facilitator—the Environmental Protection Agency (EPA)—that they are prepared to litigate against ExxonMobil Guyana, if their demands are not met in writing, in the EIA to be prepared.
Accusing the panelists of attempting to hoodwink the stakeholders as it relates to the emergency preparedness in the event of an emergency, Aboud, in raising his concerns with the EEPGL panel, stressed that the scoping exercise being conducted is for “a Caribbean audience who are concerned when we speak about oil spills.”
To this end, the FFOS founding member told the panelists “what we are saying in T&T is that for us to accept and endorse and welcome you into our territory of the Caribbean region, you need to respond to our questions and don’t hoodwink us and tell us, no we are prepared.”
He said, the concerns are credible as they relate to what obtains when a spill occurs and lambasted the EEPGL official that contended, “we have great facilities and capacities to prevent it (oil spill) from even occurring.”
According to the FFOS founding member, “I want to state on record strong objection to hoodwinking the question about preparedness for when they occur, because I am not aware of a single oil company on the planet which have not had accidents and spills.”
Adamant in his assertions, Aboud told the ExxonMobil and EPA panelists, “when the professionals on the panel chats to us—and no disrespect—real nonsense, to say that no, no, no we won’t have any (oil spills), I wish I could put his daughter’s life on the line with that promise because he wouldn’t, because accidents occur.”
According to Aboud, the preparatory planning and the EIA, “cannot hoodwink the concerns that we are raising,” and pointed to the fact that in neighbouring T&T “we probably have the world record for an island, with not many installations, but quite a few, we have reported in excess of 100 spills per year.”
further still, Aboud used his opportunity to address the panel, to articulate, “my questions are based on the fact that accidents occur, and I don’t want no professional with a wonderful accent and a long list of professional accreditations to tell me no, we are prepared it won’t occur, because history proves otherwise.”
According to project documents, Yellowtail will consist of the drilling of approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and operation of a Floating Production, Storage, and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
EEPGL has said the FPSO will be designed to produce up to 250,000 barrels of oil per day.
Onshore logistical support facilities and marine/aviation services will be used to support each stage of the Project. EEPGL is expected to use proven and good international oilfield practices. The company said it has incorporated many embedded controls into the overall Project design to reduce environmental and socioeconomic impacts.
The initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years. The project is expected to employ up to 540 persons during development well drilling, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
THURSDAY
Exxon gives contractor advance to build 4th FPSO without approval
With negotiations now completed, Esso Exploration and Production Guyana Limited (EEPGL) has awarded Netherlands-based, SBM Offshore, “contracts to perform Front End Engineering and Design (FEED) for a Floating Production Storage and Offloading vessel (FPSO), for the Yellowtail development project,” in the Stabroek Block Offshore Guyana.
EEPGL—ExxonMobil Guyana—in fact, pursuant to the awarding of the contract has since agreed to pay over an undisclosed advance to SBM Offshore to begin works. SBM Offshore is the company that built and is currently leasing to Guyana, the first two FPSO’s—Liza Destiny and Liza Unity—and is in the process of constructing a third FPSO for the Payara oilfield in the Stabroek Block—Prosperity.
No Approvals
The contract handed to SBM Offshore is the second such large one out by ExxonMobil Guyana in recent days despite the fact it is yet to receive any government approvals and permits, environmental or otherwise. The Kaieteur News reported on Wednesday that despite the fact that the Guyana Government is yet to sign off on any of the required approvals for the development of the Yellowtail oil field development in the Stabroek Block, ExxonMobil Guyana had inked a “large contract” for the subsea installations for that project.
The news was disclosed on Monday by TechnipFMC, which said it was awarded a “large” contract by Exxon Mobil Corporation, affiliate, EEPGL, to supply the subsea production system for the Yellowtail development.”
According to TechnipFMC, “a large contract is between US$500 million and US$1 billion”
This publication last Friday reported too that the ExxonMobil Guyana was in talks with SBM Offshore with regards building the fourth vessel even before the public scoping exercise to inform the oil major’s Environmental Impact Assessment Study had been completed.
SBM Confirms
SBM Offshore, in confirming the Kaieteur News report Wednesday, said it was “pleased to announce it has been awarded contracts to perform” the FEED contract for the FPSO.
Notably, the company said, “the FEED contract award triggers the initial release of funds by ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) to begin FEED activities and secure a Fast4Ward® hull.”
Meaning, EEPGL would pay over to SBM Offshore, monies to begin works including activities related to engineer designs and securing a hull that would be, presumably taken to the Keppel Shipyard in Singapore, for topside installations before being installed in the Yellow tail oilfield.
SBM Offshore in making its announcement Wednesday said, “following FEED and subject to government approvals in Guyana of the development plan, project sanction including final investment decision by ExxonMobil, and EEPGL’s release of the second phase of work, SBM Offshore will construct, install and then lease the FPSO and operate it for a period of up to 2 years.” First oil is expected in 2025.
The FPSO will be designed to produce 250,000 barrels of oil per day; will have associated gas treatment capacity of 450 million cubic feet per day and water injection capacity of 300,000 barrels per day. The FPSO will be spread moored in water depth of about 1,800 meters and will be able to store around 2 million barrels of crude oil.
Third Party Equity
Importantly too in the company’s announcement, SBM Offshore said that in order to strengthen its execution model, “given the current challenging market environment.” SBM Offshore established a special purpose company (SPC) with McDermott for the execution of the turnkey phase of the project.
To this end, “this SPC will benefit from the combined engineering and fabrication capacity as well as the experience of both companies in delivering EPC solutions to the energy industry. SBM Offshore will hold 70 percent and McDermott will hold 30 percent equity ownership in this SPC. The FPSO will be fully owned by SBM Offshore.”
McDermott, according to its website, is an international company that offers services in Engineering, Fabrication, Onshore Construction, Marine Construction Vessels, Procurement, Supply Chain Management, Startups, Commissioning & Operations and Consulting among other areas. SBM Offshore’s Chief Executive Officer (CEO), Bruno Chabas, in making the announcement Wednesday said, “When finished, the FPSO will be the largest producing unit ever built by the Company.” According to the CEO, “we are also pleased to announce our partnership with McDermott and look forward to working together through the execution phase and deliver this world class project.”
To this end, Samik Mukherjee, McDermott’s Executive Vice President (EVP) and Chief Operating Officer (COO) iterated, “Our people and resources bring the proven project execution, integrated engineering and modularization capabilities essential for delivery, assurance and success. We will align these strengths with those of SBM Offshore to drive a cohesive, efficient execution strategy together.”
Large Contract
ExxonMobil has already handed out the contract—as reported Wednesday—that TechnipFMC said it has been awarded “a large” contract by Exxon Mobil Corporation, affiliate, Esso Exploration and Production Guyana Limited (EEPGL), to supply the subsea production system for the Yellowtail development.”
According to TechnipFMC, “a large contract is between US$500 million and US$1 billion”
It was noted, however that “the full contract award will not be included in inbound orders, until the project receives final investment decision and government approvals.”
According to the company, “subject to government approvals and final project sanction, TechnipFMC, will provide project management, engineering, manufacturing and testing capabilities to deliver the overall subsea production system.”
It said, “…the scope of the project includes 51 enhanced vertical deepwater trees (EVDT) and associated tooling, as well as 12 manifolds and associated controls and tie-in equipment.”
To this end, Jonathan Landes, President, Subsea at TechnipFMC said, “We are very excited to continue our relationship with ExxonMobil through this award, which is our fourth within the Stabroek Block. We are proud of our dedicated Guyanese employees and are committed to the continued development and expansion of local capabilities.”
Scrutiny/Criticism
EEPGL—ExxonMobil Guyana—has, in recent years, been coming under increasing public scrutiny and receiving criticism over its high-handed approach towards projects in Guyana with negotiations being done for project costs to be recovered from oil revenues, and for which Guyanese authorities have little to no input.
Outside of its inability to audit the expenses for the Liza I&II, Guyanese authorities have also been coming under increased scrutiny concerning their dealings with ExxonMobil Guyana, as highlighted during the final scoping exercise to inform the crafting of the Environmental Impact Assessment for the Yellowtail Development.
According to project documents, Yellowtail will consist of the drilling of approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and operation of a Floating Production, Storage, and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
EEPGL said the FPSO will be designed to produce up to 250,000 barrels of oil per day.
Onshore logistical support facilities and marine/aviation services will be used to support each stage of the Project. EEPGL is expected to use proven and good international oilfield practices. The company said it has incorporated many embedded controls into the overall Project design to reduce environmental and socioeconomic impacts.
The initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years. The project is expected to employ up to 540 persons during development well drilling stage, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
‘PPP/C not interested in ‘good governance oil sector’- Ram
… Govt. comfortable with Ali, Bharrat & Jagdeo in charge
The incumbent Peoples Progressive Party Civic (PPP/C) administration is not interested in any form of good governance with regards the management and administration of the country’s still nascent oil and gas sector.
In fact, the ruling party is comfortable with the status quo, where there are basically three persons in charge of the sector namely, Head of State, President Irfaan Ali, since the Natural Resources Ministry falls under Office of the President, Substantive Minister, Vickram Bharrat and Vice President, Bharrat Jagdeo.
These were among some of the sentiments expressed by Chartered Account, Attorney-at-Law and civil rights activist, Christopher Ram, who was at the time a Guest of David Hinds’ Politics 101. Qualifying his position, Ram stated that: “if it was (interested in good governance) it would have reactivated the Bill of the Petroleum Commission.”
Adamant that the oil sector is being controlled by a few persons, Ram insists it is clear that the, “boss in all of this is Jagdeo.” Ram noted too in his observations with regards the shortcomings of the administration, the fact that it has reneged on its commitment from doing an audit as well.Additionally, he recommended that the government immediately set about a Commission of Inquiry with a view to seeking recommendations on having the contract with ExxonMobil Guyana renegotiated. A contract, he recalled was described as the best in the world by ExxonMobil’s Consortium partners, Hess Corporation Chief Executive Officer (CEO), John Hess.
To this end, he posited however, the “PPP is not interested in good governance in the oil sector.” With regards the monies being lost annually, as a result of the lopsided contract, Ram hesitated to come up with a specific figure, since according to the accountant, Guyana is at present unaware of the production costs—paid for using 75 percent of oil produced—and that this inherently impacts returns for Guyana. He posited however, it is “totally clear, we losing millions.”
This in part is due to the fact that the first take on any earnings from the Stabroek Block, “is to give back to the Oil Company.” Ram noted too that in an economic sense they, the oil majors, don’t risk a penny because they are guaranteed their returns and pointed out that under the 1999 agreement signed by then President Janet Jagan, “all the money they spent they have to get back, and they get first claim”
Speaking to the US$9B figure being bandied about, representing development costs for the Liza I & II oilfields, Ram was adamant these should have been audited before moving on, but this was not done. He used the occasion to also lament “we are already borrowing heavily on future oil income and that’s dangerous.”
FRIDAY
Guyana worse off with Chinese than under colonial rule – Ram
…says this form of colonialism is more ruthless; without conscience
Amid concerns about Chinese’s growing influence in Guyana, Chartered Accountant and Attorney-at-Law Christopher Ram said, based on interactions in his circle, it was suggested that “if one were to do an economic analysis we are worse off now with the Chinese than when we were under colonial rule.”
This newspaper has reported heavily on Guyana’s relationship with China which was established decades ago and the exploitation of this country’s resources by Chinese companies operating here.
Ram made the comments while being a guest on Dr David Hinds’ online programme Politics 101 Tuesday night. He opined that at present in Guyana, “the Chinese control just about everything” and have in fact managed to infiltrate every village across the country.
Lamenting, another aspect of the state of affairs with regards the Chinese and their operations in Guyana, Ram told Hinds, “I know of one area where they are almost a law onto themselves.”
The Chartered Accountant was at the time responding to a question posed to him by a member of the public inquiring into his views. During the interactive session, he spoke about the need for a complete rewrite of the constitution in a fashion that addresses governance, outdated laws, and eliminates any remnants of colonialism.
Ram said Guyana is worse off with the Chinese operating here and posited, “…we are getting a different form of colonialism and it’s probably more ruthless and without any conscience.”
Among the more recent reportage involving Chinese’s relations with Guyana’s includes the award of two contracts for the construction of two of the country’s largest ever projects namely the construction of a New Bridge across the Demerara River and the Amaila Falls Hydro Electric Project (AFHEP)—estimated to cost in excess of US$1B.
Government at the beginning of the month had announced that it retained controversial Chinese contractor, China Railway First Group (CRFG). That same company had previously signed a contract to build the said project several years ago and to be paid for by power purchased from the project. Under that arrangement the Chinese would Build Own Operate [and then] Transfer (BOOT), the hydroelectric plant.
As regards the new bridge across the Demerara River, the administration announced that a Chinese company which was accused of fraud by the World Bank secured the contract for US$257M.
This, in addition to reports since confirmed by Vice President Bharrat Jagdeo, who told reporters during a recent press engagement that Guyana was exploring a line of access to credit to the tune of some US$1.5B.
Outside of China National Offshore Oil Company’s involvement in the oil sector operating as an ExxonMobil partner in the Stabroek Block, there are a number of Chinese owned companies operating in the other extractive industries, namely mining and forestry.
Among some of the companies that would have made headlines in recent times with regard to their practices in Guyana is Zijin Mining which operates the Aurora Gold Mines. The numerous lamentations with regard this company and its operations are rooted not only in its perceived ‘lucrative’ mining licence and concessions bonanza but its mistreatment of workers. This company, having mined out the ore from its original mining pits, has since announced plans to begin underground mining.
Another Chinese’s company operating in Guyana that found their performance locally wanting/lacking and coming under scrutiny, is the China Harbour Engineering Company (CHEC) and relates to the renovation of the Cheddi Jagan International Airport (CJIA).
Lamentations over this project include the manner in which the contract was inked secretly in Jamaica, the number of years ongoing, the cost overruns and numerous extensions among other complaints.
That contract, which was initially inked at S$150M, has since exceed that sum but according to Public Works Minister, Bishop Juan Edghill, would not run past US$200M.
Another one of the companies that had come in for flack in recent months is the one working on the rehabilitation of and expansion of the Sheriff Street/Mandela road—a $1B project.
This publication reported last month that the Chinese Company working on the project, Sinohydro Corporation would not be able to meet the October 31 deadline for completion because of shipping delays.
Sinohydro was awarded the contract in 2017 and works began in 2018. It was supposed to be completed already but was plagued by constant delays.
One of the excuses it had given regarding its failure to meet the project deadline was that it had to halt works during the five-month gridlock over the March 2, 2020 General and Regional elections. Works recommenced after it ended in August 2020 and a new deadline was set for August 4, 2021.
Sinohydro was unable to meet that deadline and a new one was set for August 31, 2021.
It did not meet that deadline either. They were granted until October, 31, 2021 but will be unable to meet this deadline also, due to the rain.
Last month too, this publication reported that despite bidding higher than local contractors, a Chinese company, Shandong Degian International, was still awarded a contract to rebuild the St. Rose’s High School located at Church and Camp Streets, Georgetown.
Included in the litany of complaints that were raised publicly, about the practices employed by Chinese companies in Guyana in recent years, is the US$200M botched by the Chinese contractor, China National Technical Import and Export Corporation (CNTIC).
The state of affairs with regards the practices employed by Chinese companies in Guyana had even seen the Guyana Revenue Authority back in 2017 launching a probe into an alleged racket in which the Chinese embassy was used to bring in containers of goods for its nationals who are operating businesses here.
GRA had in 2017 reportedly stumbled on what seemed like an abnormally large number of containers brought in by the Chinese embassy.
As a matter of fact, when GRA officials checked, they found that the Chinese embassy brought in more containers than all the other embassies combined.
Investigators initially believed that maybe there was a mistake with the number of containers.
However, further checks confirmed that the embassy allegedly used its diplomatic channels to pass the containers through the wharves.
Under the diplomatic arrangements, shipments and packages for embassies are not too closely scrutinized.
It is the belief that the containers were filled with all sorts of items – from hardware and other accessories – which eventually ended up in a number of Chinese-owned stores. It meant very little or no taxes were paid on the items.
Kaieteur News was not told exactly how many containers, but officials insisted that they were enough to be equivalent to tens of millions of dollars in lost taxes.
Contacted this week, Commissioner-General of GRA, Godfrey Statia, was reluctant at the time to delve into details.
The Chinese ‘takeover’ as was lamented in a feature some years ago published by the Kaieteur News had delved into the plethora of Chinese owned businesses that had begun popping up in Georgetown, the country’s capital city and central business hub, especially Regent Street.
Amidst the challenges, many local businesses have closed their doors but there are a few local Regent Street businesses which have found a way to reinvent themselves to keep offering their services to the Guyanese populace.
“Chiney selling everything now; from rope to soap.” one commuter commented. “With the number of Chinese’s stores they got in here, I think the Government should rename Regent Street, Chinatown,” he added.
It is no secret that the Chinese are offering everything that the local businesses have but at a cheaper price, and the visitors seem to take full advantage of it.
It was even observed, that some Chinese operated stores even have Portuguese and Spanish names targeting the ever increasing migrant population.
Guyana Manganese Inc. (GMI), a subsidiary of the Bosai Minerals Group is another of the Chinese companies operating in the Mathews Ridge area involved in mining for manganese.
In addition to the numerous complaints against the company in relation to its environmental dangers, the company has also been accused of inhumane working conditions for local employees.
Another company to have featured prominently about its operations in the Forestry Sector is
Bai Shan Lin.
ExxonMobil wants to extend hold on Stabroek Block due to COVID – 19
– Sends application to Govt. for consideration –Hess Chief Operating Officer reveals
Given that the life of the Stabroek Block’s exploration licence comes to an end in 2026, ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), has sent the PPP/C Government an application to extend its hold on the block for more than 10 years. This request for extended time is based on operational hindrances that resulted from the effects COVID-19 pandemic.
Making this revelation to the international market was Exxon’s partner on the Stabroek block, Hess Corporation. Specifically, Hess’ Chief Operating Officer (COO), Greg Hill made the disclosure during his participation at Bank of America’s recently held Global Energy Conference. There, Hill spoke of the company’s exploration plans for the block and whether he believes the four and a half years left on the licence is enough time to fully explore the prospective resources of the Stabroek Block.
Hill said he is of the view that the Stabroek Block partners will have enough time to figure out what they have in other parts of the deep water concession given the drilling programme the partners have in the pipeline. The COO said, “…we feel confident that with the active programme of 12 exploration wells planned for next year and 12 (done) this year and (if we) continue this pace, then we can definitely prosecute most of what we want to on the block.”
The Chief Operating Officer also alluded that the company is not worried about the activation of relinquishment provisions come 2026 since an application is before the Guyana government for an extension. He said, “Basically, how relinquishment works is you have to lock down all the acreage you expect to develop with a licence and when the time comes, that is 2026, you relinquish (or return to the State) what you don’t want out of that…The operator has applied for an extension due to the effects COVID-19 on that 2026 (timeline) and we will see if we actually get that but there could be an extension to the exploration licence.”
ABUSIVE
Industry stakeholders such as Chartered Accountant and Attorney-at-Law, Christopher Ram have been extremely critical over the years about the arrangements for relinquishment in the Stabroek Block Production Sharing Agreement (PSC).
Just recently, Ram told Kaieteur News that when it comes to relinquishment, both the Coalition and the PPP/C Governments have utilized a loophole in the nation’s Petroleum Act to the benefit of ExxonMobil and its partners, Hess Corporation and CNOOC.
Ram explained that the initial period of a prospecting licence is four years. Such licence is subject to two renewals of three years each. Expounding further, the lawyer said, “The standard provision in the Petroleum Act is that on an application for first renewal at the end of the four years, the company is required to give up 50 percent of the blocks granted and on an application for the second renewal, which is at the end of seven years, it is required to give up 25 percent of the remaining concession.”
He added, “At the end of the 10 years, which brings you to the end of the third renewal period, the company has to give up all portions of the block not subject to a production licence…”
He noted that under normal circumstances, ExxonMobil would have been expected to follow the foregoing process. Instead, through the reckless abuse of the loophole in the law which obliges that the subject Minister can vary the relinquishment arrangements, no relinquishment was required after four years and only 20 percent after the end of seven years, compared with 75 percent in normal situations.
But based on the recent revelations made by Hess’ COO, the relinquishment provision is more generous than Ram predicted. Instead of 20 percent being given up at seven years, none will be required. Instead, Exxon and its partners will only be required to return a small portion of the block at the end of 10 years.
Ram has also expressed the fear that with little oversight and undisclosed arrangements between ExxonMobil and the Government, the portion to be given up can be subject to any form of machination via production licenses. He said, “ExxonMobil and its friends are pushing for more and more explorations licenses so that by the time the first relinquishment is due…, the 20% would be of a considerably reduced portion of the Stabroek Block.” To date, ExxonMobil has made over 20 significant discoveries in the Stabroek Block. It is also rushing to find more oil discoveries before the end of the year and no doubt before 2026.
SATURDAY
Exxon begins talks with Govt. on 4th Field Development Plan
…despite incomplete consultations
Esso Exploration and Production Guyana Limited (EEPGL) is pressing ahead with its fourth planned project in the Stabroek Block and has commenced talks with government regarding the company’s Field Development Plan.
The company is yet to complete its Environmental Impact Assessment (EIA) and obtain Environmental Authorization for the project.Notwithstanding this, the company met with Natural Resources Minister, Vickram Bharrat and a delegation from his ministry on Thursday, for “the first engagement” with EEPGL on the Yellowtail Field Development Plan.
According to the ministry, during the interactive session, the EEPGL team responded to queries by the Technical Team from the Petroleum Management Unit of the Ministry of Natural Resources, and provided clarification and updates relating to submissions on the Yellowtail Field Development Plan.
Also participating in this engagement are senior representatives from the Ministry of Natural Resources, Ministry of Finance, Guyana Geology and Mines Commission (GGMC), Guyana Revenue Authority (GRA), and the Environmental Protection Agency (EPA.
According to the project summary, submitted to the EPA for environmental authorization, Yellowtail will consist of drilling approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells), installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and the operation of a Floating, Production, Storage and Offloading (FPSO) vessel in the eastern half of the Stabroek Block and— ultimately—project decommissioning.
Initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years.
The project is expected to employ up to 540 persons during development well drilling stage, with approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.
Additionally, it was noted that even though the Yellowtail Project, the fourth to be developed in the Stabroek Block, is poised to see its costs going beyond US$9B, it is still regarded by EEPGL’s Stabroek Block Partner, Hess Corporation as having “outstanding economics” that will work in the company’s favour.
Specifically, the company’s Chief Operating Officer (COO), Greg Hill, recently disclosed that the final numbers have not been decided for the project, as this would only follow approval by the government.
Be that as it may, it has predicted that inflationary pressures on the market will push the cost beyond the preliminary estimate of US$9B. Hill was keen to note, however, that the “superefficient” provisions of the Stabroek Block Production Sharing Agreement (PSA) will allow for all expenditure to be recouped.
Hill noted, too, that the economics of the project work in the company’s favour, as it has a breakeven of US$25 to US$32 a barrel. Taking these factors into consideration, the COO said that the Yellowtail Project is, “One of the best projects on the planet…”
Chief Executive Officer, John Hess agreed with Hill’s perspective as he said, “This development has simply outstanding financial returns, some of the best in the industry…So, it’s outstanding economics. Yes, the costs are higher, but the resource we’re recovering is much higher, and these are some of the best economics in the industry.”
As regards the production capacity of the project, Hill said it is poised to be at 250,000 barrels of oil per day, but noted that it is not unusual to see a 10 to 20 percent increase after the relevant data has been gathered.
The operator of the Stabroek Block explained via the project’s Environmental Impact Assessment (EIA) that the costs for developing Yellowtail are expected to be higher, since there would be a greater number of development wells and associated drilling costs when compared to its Payara project, which will also cost Guyana $1.8 trillion.
Despite the astronomical costs, Exxon believes that the project should be supported, as it would generate benefits for the citizens of Guyana in several ways, which would otherwise not be there in the absence of the project.
Jagdeo giving Exxon 102 cent to collect 2 cent.
Apr 25, 2024
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