More oil projects must not be limited to greater barrels per day but more revenue for Guyana – AFC

Sep 05, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – As ExxonMobil Guyana embarks on the process to receive an Environmental Permit for its sixth offshore development, Whiptail, the Alliance For Change (AFC) is insisting that more projects should not be limited to increased daily production rates only, but greater benefits for the country.

Executive Member of the party and Shadow Minister of Natural Resources, David Patterson in an invited comment on Monday told Kaieteur News that while the political group is pleased to see progress in the sector, the progress should not be limited simply to an increased number of barrels daily.

Patterson explained, “It was our expectation that our country would have progressed in an equally rapid manner, sadly this is not the case.”

The former Minister pointed out that the new project would not be governed by the recently approved but “highly flawed” Petroleum Activities Act.

To this end, he said, “Despite their manifesto promise, there will be no increase in royalty fees, or production shares, which the country would have expected from an operator that is now in their fourth year of production.”

He was keen to note that the Opposition had proposed several amendments to the Petroleum Activities Bill which would have caused all future production agreements to comply with the new law. Patterson argued that government has “shamelessly” excluded Exxon from these amendments, yet have not demanded any adjustments to the existing agreement.

To this end, he said, “We have stated, that we in the Opposition, stand committed to support the government in any renegotiation or realignment of our oil and gas sector, provided such adjustments delivers better benefits to the citizens of the country.”

The former Minister pointed out that by now, Guyana would have already cleared the expenses of the second project, Liza Two, and could have been benefitting from a 50/50 split of the resources had the administration insisted on the inclusion of a ring-fencing provision as promised.

Meanwhile, as it regards regulatory oversight and management, the Shadow Minister of Natural Resources argued that the Environmental Protection Agency (EPA) will not insist on unlimited liability coverage to protect the country from a spill while Exxon would still enjoy flaring as much gas as they need under the guise of a paltry fine for damaging the environment.

“There will be no requirement for studies on any possible ill effects on our struggling fishing industries. As before, the upcoming public sessions, will be nothing more than public shows, since soon as the license is approved, Exxon will request and be approved permission to extract above the listed safe amount in EPA permits,” Patterson added.

He pointed out that even though the Liza Destiny Floating Production Storage and Offloading (FPSO) vessel is designed to safely operate at 120,000 barrels per day, the operator is producing approximately 150,000 barrels daily while a similar situation is replicated at the Liza Unity FPSO.

Patterson concluded that the process of obtaining a Permit from the EPA is nothing short of a “rubber stamp process” since even the consultation process is mere “window dressing”.

He reasoned, “It will follow the normal process, a presentation by the consultations followed by a short question and answer session chaired by a PR consultant who trivializes this important process, at the same time reducing it to a comical show – then abruptly announces that time has expired, leaving important questions unanswered.”

ExxonMobil has submitted an Environmental Impact Assessment (EIA) to the EPA as part of the legal process to obtain a Permit from the regulator.

Its sixth development, Whiptail, will target the Whiptail, Pinktail and Tilapia discoveries, estimated to hold over one billion barrels of oil resources. The project is poised for startup in 2027-2028 and will produce between 220,000 and 275,000 barrels of oil per day (bpd).

The company submitted an application to the EPA back in January for the project. According to the Project Summary, Whiptail is located in the south eastern portion of the Stabroek Block, approximately 183km from Georgetown. Current plans include drilling via drill ships to produce oil from approximately 40 – 65 production and injection wells.

This publication reported that Whiptail is pegged at US$12.9 billion. Vice President, Dr. Bharrat Jagdeo recently confirmed that no further fiscal increases such as a higher royalty rate would be sought for this sixth project.

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• Alliance For Change (AFC), ExxonMobil, Guyana, Projects, revenue

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