Govt. grants Exxon production licence for 5th oil project

Apr 29, 2023 News

Kaieteur News – The Government of Guyana through the Ministry of Natural Resources (MNR) on Friday announced the approval of the Uaru Field Development Plan (FDP) and the issuance of the Uaru Petroleum Production License to ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited.

The ministry, with support from the petroleum division within the Guyana Geology and Mines Commission (GGMC), said it worked alongside ExxonMobil Guyana from May to November 2022. As part of this, it explained that various technical and financial scenarios for developing the Snoek, Mako and Uaru reservoirs were presented.

Kaieteur News understands that the pre-submission engagements amongst MNR, GGMC and Exxon were not a pre-approval mechanism but served to optimize alignment with legislative frameworks and international best practices.

The ministry further noted that the November 1, 2022 submission of the production license application and accompanying Field Development Plan underwent a rigorous review process by MNR and GGMC staff, supported by an independent consultant procured through the World Bank.

Minister of Natural Resources Vickram Bharrat hands over the President of ExxonMobil Guyana, Mr. Alistair Routledge, the signed petroleum production licence for Guyana’s fifth offshore development, Uaru. They are joined by Production Manager of CNOOC Guyana Mr. Xu Xiangdong (far left) and Hess Corporation’s Vice President of Exploration, Appraisal, and Developments for Guyana Suriname, Mr. Tim Chisholm. They represent the two other oil majors comprising the Stabroek Block consortium.

The FDP review process took over four months while the overall process took over 11 months.

The ministry explained that the Uaru development benefits from EM’s “Design one, build many” philosophy, which allows for more efficient project implementation by leveraging similarities between black oil projects.

The project is expected to produce 812 million barrels of oil equivalent resources in the initial 20-year licensed period through a total of 44 wells – 21 producers and 23 water and gas injectors.

The floating, production, storage and offloading (FPSO) vessel, Errea Wittu, which will be built by Japanese FPSO-building and operating company, MODEC, will produce 250 kbd at peak production.

First oil is anticipated for the second quarter of 2027, thereby boosting Guyana’s overall production rate to over 1,100,000 barrels of oil per day.

Additionally, MODEC will now compete with SBM Offshore, the Dutch-based company responsible for the first four projects in the Stabroek Block. Notable changes in the FPSO design compared to previous projects include using a combined-cycle gas turbine for power generation and a closed-loop flare system, reducing greenhouse gas emissions from the project.

Certain conditions that are applicable to the Yellowtail project were excluded from the Uaru PPL since they were deemed to have been sufficiently addressed by the Yellowtail licence conditions.

Similar to the Payara licence, the Uaru PPL boasts a Unit Development component, covering four of the Uaru field reservoirs that extend into the Liza production area.

The ministry was keen to note that the reservoirs are not being tapped into by Liza developments and are instead covered by the Uaru licence.

The Uaru project is budgeted to cost US$12.683 billion and it is subject to cost recovery under the Stabroek Block Petroleum Sharing Agreement.

Importantly, the cost reporting condition was strengthened to include annual synergy reporting, acknowledging the shared facilities and personnel between these projects that result in cost savings.

Additionally, a Capping Stack condition was included in this licence to ensure compliance with the commitment to have the Capping Stack in-country as required by the Yellowtail licence. In summary, the approval of the Uaru Field Development Plan and issuance of the Uaru Petroleum Production Licence marks the fifth approved production operation for offshore Guyana within the prolific Stabroek Block.

The Uaru project is expected to significantly contribute to Guyana’s oil production and highlights the benefits of leveraging similarities between black oil projects.

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CNOOC, Esso Exploration and Production Guyana Limited (EEPGL), ExxonMobil, Government, Ministry of Natural Resources (MNR)

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