Govt. let Exxon merge oil fields in Stabroek Block and hid it from public for three years

Aug 13, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – In a recent revelation, Vickram Bharrat, Guyana’s Minister of Natural Resources, disclosed that the government had covertly granted ExxonMobil a unitization agreement for the Liza and Payara oil fields, and kept the nation in the dark for three years. This move was made to permit ExxonMobil to extract resources from a well in the Liza license area using the Prosperity floating production, storage and offloading (FPSO) vessel.

Bharrat finally discussed the matter while debating the Petroleum Activities Bill in Parliament close to midnight last Wednesday. He explained, “When we were doing the Payara license one month after taking government in August 2020, we were in quite a dilemma. We were in quite a dilemma when the operator asked us for a unitization agreement. We didn’t know anything much about the unitization agreement because we were never faced with quite a situation like that before.”

The rationale behind this move was to ensure that no oil resources were left stranded. As Bharrat said, “There was one well that was in the Liza license area, but it was not producing in the Destiny or the Unity FPSO. So it means that if we didn’t allow, if government didn’t allow Exxon to pull from that well in the Liza development [with] the prosperity FPSO, that resource would have been stranded there.”

The government allowed the unitization of the fields, though there was no legal framework at the time to facilitate it. The government has since decided to include unitization provisions in the new Petroleum Activities Bill to ensure clearer guidelines in the event of future unitization requests.

Bharrat outlined potential scenarios of how unitization may play out in the future, discussing the possible challenges. He stated, “It can become challenging when you’re dealing with two different operators and two different blocks… And then it goes because if the Corentyne block is adjoined to Suriname and then there are reserves on both sides, but it can be developed quickly and easily in Guyana. Then our Foreign Affairs minister would have to engage the Surinamese government to ensure that we have an agreement with them.”

While the government’s initiative to equip itself with a proper framework to handle such situations in the future is commendable, it is concerning that the unitization of the Liza and Payara oil fields was not communicated to the public. This is especially so, as Bharrat did not disclose why it is necessary for ExxonMobil to produce from a Liza well with an FPSO that does not operate there.

The Prosperity FPSO arrived in Guyana earlier this year, and will start production before the year ends. It can produce 220,000 barrels per day (bpd). It is the third FPSO. The Liza Destiny and Unity FPSOs are also producing, and have reached levels in excess of 400,000 bpd.

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Government, Guyana, revelation, Stabroek Block, Vickram Bharrat

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Govt. let Exxon merge oil fields in Stabroek Block and hid it from public for three years

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