Latest update April 19th, 2024 12:59 AM
May 02, 2023 ExxonMobil, News, Oil & Gas
Kaieteur News – After granting the relevant regulatory approvals on April 27, 2023 for ExxonMobil’s fifth oil project in the Stabroek Block, the PPP government has now demanded that a breakdown of the costs for the development be provided within 90 days.
This demand for financial and cost reporting was outlined in the Uaru Petroleum Production Licence that was awarded to the ExxonMobil-led consortium by the Natural Resources Ministry. The document states that, “The Licensee shall submit financial reports consistent with the Petroleum Agreement and its accounting procedure for the Uaru Project in such form and manner as directed by the Minister.”
It further notes that within 90 days from the date of the licence, the Licensee shall submit cost estimates for the Uaru Project in the format and degree of detail no less than that as set out in Annex C of the Stabroek Block Production Sharing Agreement. That section allows for a breakdown of development and operating cost estimates.
Government has also requested to see how the Exxon Group will ensure cost savings by leveraging the infrastructure and services available from the previously approved production areas at Liza Phase One, Liza Phase Two, Payara and Yellowtail. “The foregoing reports of development and operating costs, and the synergy report required above shall be updated and submitted annually within 30 days of the anniversary of the date on which such reports are due or more frequently as the Minister may require,” the licence states.
The Uaru 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 250,000 barrels of oil per day 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 Natural Resources Ministry said last Friday that the Uaru project is budgeted to cost US$12.683 billion and 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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Apr 19, 2024
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