Jul 19, 2022 News
Kaieteur News – In a recent Reuters article titled, “Guyana races against the clock to bank its oil bonanza”, Vice President Bharat Jagdeo, is quoted as saying that the Government of Guyana wants to accelerate oil exploration to develop the economy speedily – even if it means Guyana gains less.
Notwithstanding calls from sections of society to not licence any new projects for development just yet, the Vice President is reported in the media on different occasions, pushing the oil companies to go faster. According to the Reuters article, Guyana is putting its foot on the gas to exploit its vast oil reserves, even if that means sacrificing some longer-term gains. The Vice President said, “We want to accelerate exploration so we can develop the economy as fast as possible” adding, “We will probably get less, but we might be able to get faster development.”
Last Tuesday at the Guyana Manufacturing and Services Association (GMSA) mid-year dinner, Jagdeo had stated that Guyana needs to develop its oil and gas resources as quickly as possible before the world decarbonizes.
He argued that calls to halt the developments at the present in order for the country to realise a larger share of its oil revenues sooner, would not benefit the country, as it could introduce added inflationary pressures to the country’s domestic economy.
According to Vice President Jagdeo, “if we don’t keep a steady stream of investments in the oil and gas sector to open up the reserves to prove it and to take it out as quickly as possible before net zero kicks in, and the demand goes down then we’ll run out of momentum.”
Earlier this year, at the opening of the International Energy Conference, Jagdeo noted that despite there are shortcomings in Guyana’s regime with regard its structures, frameworks and regulations in place for the industry, the developments in the industry must continue in an accelerated manner.
The VP is reported as saying, “we have been trying to evolve the regime; because the pace of development has been rapid.” As such, the Vice President was adamant, “…we have to, at the level of the government, try to keep the regime evolving at a pace where we don’t become a humbug on the development of the industry and slow down the pace.”
Guyana has signed onto a lopsided Product Sharing Agreement (PSA) with American oil giant, ExxonMobil, subsidiary Esso Exploration and Production Guyana Limited (EEPGL), along with partners Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited.
Under the PSA, the oil companies are able to recover up to 75 percent of the gross monthly of oil, in order to pay overhead expenses including the payments for the developments.
Several analysts have argued that the 75 percent arrangement lends to the lopsided arrangement. Coupled with the fact, the oil companies have already discovered in excess of 11 billion barrels of recoverable crude oil, there are now plans to have at least 10 FPSOs in place—one every year after 2027. The argument is that with all of the development costs paid off, it would mean less expense for the oil operations and as such more profit to be split theoretically increasing Guyana’s share.
Since Liza discovery in 2015 on the prolific Stabroek Block, which spans more than six million acres in the country’s Exclusive Economic Zone (EEZ) – the consortium led by EEPGL, have made a plethora of finds.
EEPGL is the operator of the country’s richest oil block. The consortium has made five discoveries for 2022 in the Stabroek Block. The partners in the Stabroek Block currently operate two producing fields namely the Liza I and II locations being produced by the Liza Destiny and Unity Floating Production Storage and Offloading Vessels. The Stabroek Block partners was pumping 120,000 barrels of oil per day (bpd) at the start of 2022 and plans to hit 360,000 by the end of the year.
EEPGL has already secured the relevant permissions to develop two more projects, the Payara and Yellowtail fields, to be produced using the Prosperity and One Guyana FPSO’s. Additionally, Exxon is presently engaged in an aggressive 25-well exploration campaign that began back in June of last year. That drilling campaign is expected to last until the end of 2025. This is in addition to a separate 12-well campaign that had begun back in December 2020 in the Stabroek Block and ended earlier in 2021.
Outside of the loaded Stabroek Block, Exxon is also engaging the Environmental Protection Agency (EPA) to commence two separate 12-well drilling campaigns in the Canje and Kaieteur oil blocks.
For the Canje Block, Exxon is hoping to commence its drilling campaign in the fourth quarter of this year and wrap up in the first quarter of 2025. The Canje Block is located offshore, in deepwater of Guyana, southeast of the Kaieteur Block, and north-northeast of the Stabroek Block. Meanwhile for the Kaieteur Block, this exercise, once approved, would start in 2022 or 2023 and conclude by the first quarter of 2027. The Kaieteur Block, which spans 13,500 km2, holds a gross, estimated prospective resource of over 2.1 billion barrels of crude.
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