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ExxonMobil unlikely to reuse Guyana’s FPSOs in future projects
…as soaring cost bank raises concern among citizens
Kaieteur News- The cost factor attached to the development of oil projects is beginning to cause worry among some Guyanese, especially as the price of the commodity is expected to continue on a downward trend.
A citizen, Cyphil Swan raised concerns about the soaring cost bank at an ExxonMobil meeting
It is not only a new Floating Production Storage and Offloading vessel (FPSO) that is required, but new subsea material as well to aid in the production process. Another hidden cost is the operation and maintenance of the projects, which is often not considered by many.
These costs are added to a bill that Guyana is required to pay ExxonMobil, using its oil. Each month, 75% of all the oil produced is allocated to cover these expenses. The remaining 25% is split equally with Guyana as profits. More cost therefore means less revenue for the country.
Cognizant of this reality, one citizen, Cyphil Swan during a public scoping meeting for the Longtail project, asked ExxonMobil to explain the need for all the new FPSOs, given the soaring costs for the country which ultimately delay higher profits.
In response, ExxonMobil’s Projects Environmental and Regulatory Manager, Mariya Skocik explained that the development of every project requires certain facilities, including an FPSO to extract the resources. At the same time, Guyana receives a portion of the profits from the FPSOs that is deposited into the Natural Resource Fund (NRF).
Meanwhile, Exxon’s In-Country Projects Manager, Rebecca Cvikota pointed out that numerous FPSOs are required, since the resources are not located in one large reservoir.
Guyana’s first FPSO, the Liza Destiny
She said, “The reservoirs, it’s not just like one big reservoir. The reservoirs are sometimes not even connected to each other, which means they’ll need a separate investment, a separate FPSO and separate wells to access that specific reservoir’s oil, water and gas.”
To this end, Cvikota noted that the various FPSOs offshore all access different reservoirs. She also pointed out that the company is saving some cost by developing three different fields with one FPSO in this new project- Longtail.
With the company now onto its eight offshore development, with plans revealed so far for 10 projects and several discoveries still undeveloped, Kaieteur News queried whether there was a possibility of any of the FPSOs being reused for any of the company’s future projects.
The Projects Manager indicated that this was unlikely, unless a new discovery is found several years from now.
“I think that would be unlikely is what I would say because Destiny, Unity and Prosperity are still new in their life span and so I guess if we found one (discovery) way down the road, maybe that would be an option but more likely in the near term, I would say we would need additional facilities to be able to do the developments that we are talking about,” she said.
Additionally, Cvikota explained that each development is different, which would raise questions about the suitability of that vessel for a new development.
When it comes to the resale value of the FPSOs, she noted that some of the vessels are not built from scratch. As such, the Projects Manager stated, “That means that we use oil tankers that have kind of done their job for their first useful life. We’ve brought them in, we’ve refurbished them, we’ve rebuilt them in many ways to then serve as an FPSO. We would do the same thing when it’s time to decommission an FPSO. We would see who is able to utilize it, who wants to put in that maintenance work to rebuild different parts of it so that it can have a second life as well.”
ExxonMobil and costs
In its 2023 Annual Report, ExxonMobil Guyana Limited (EMGL) said it invested more than G$6 trillion (US$30B) in the Stabroek Block. It also said the company and its co-venturers have committed to invest another G$5 trillion (US$25B) through 2027.
Vice President Bharrat Jagdeo had informed Reuters earlier this year that the company has already recovered US$33B in costs.
(ExxonMobil unlikely to reuse Guyana’s FPSOs in future projects)
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