No way Guyana can produce one million barrels per day by 2025 - Ramson - Calls on Jordan to stop selling dreams

No way Guyana can produce one million barrels per day by 2025 – Ramson – Calls on Jordan to stop selling dreams

Mar 06, 2019 News

By Abena Rockcliffe-Campbell

Minister of Finance, Winston Jordan, apparently displayed a lack of understanding about what is happening in his country’s oil sector when he said that Guyana is on track to produce one million barrels of oil per day by 2025.
People’s Progressive Party’s (PPP) Charles Ramson, yesterday, contended that Jordan misled the nation and may now be responsible for false hope.
Ramson stressed the dangers of “unrealistic expectations.”
The lawyer, who holds a Master’s degree in Oil and Gas Management, was responding to an article published by this newspaper.

Minister of Finance, Winston Jordan

That article quoted Jordan as saying that given ExxonMobil’s prolific finds in the Stabroek Block, Guyana is in line with its 2025 timeline to produce one million barrels of oil per day. The Minister made this declaration as he spoke at the opening of the Prospectors and Developers Association of Canada (PDAC) Convention in Toronto, Canada.
Jordan boasted of Guyana’s more than five billion barrels of recoverable oil discovered off-shore by ExxonMobil in partnership with Hess and CNOOC.
But, in an invited comment, Ramson said, “Minister Jordan is just selling dreams; he is living in a fantasy world…This sadly shows that even the Minister of Finance does not have a handle of our oil sector.”
Ramson said that offshore production has long lead times averaging about four years from the point of a final investment decision (FID). So far, ExxonMobil has only made FID for Liza Phase one and is expected to make its FID for Liza Phase two by the end of the first quarter of this year.
Ramon noted that Exxon has only so far indicated a strong willingness to execute three to four projects.
Ramson recalled that the first project, known as Liza phase one started in 2016 and will be capable of producing a maximum of 120,000 bpd. Ramson said, “Now one thing that Jordan actually got right is the fact that production for Liza phase one can start as early as year end.”
There is a “larger project” that Ramson pointed to—Liza 2—which is in the final stages of approval and will be capable of producing a maximum of 240,000 bpd. If that project is approved this year, production should commence by 2023 earliest, said Ramson.
The lawyer told this newspaper, “There are two other projects being examined and seriously considered at the moment—Payara and Pacora. That is likely to add another 180,000 bpd from another FPSO (Floating Production and Storage Offloading unit) and a tie-back.”
Ramson said that even if all goes well with those projects, Guyana will still be nowhere close to producing one million barrels per day by 2025.

Attorney at Law, Charles Ramson

“If you do the Maths we are nowhere near 1million bpd in production and that’s pretty much best case scenario. We would be lucky to see 500,000 – 700,000 bpd by 2025. The difference in gross projects revenue between 700,000 bpd and 1m bpd at $50 per barrel and 300 operating days is US$5B. That is huge. That is almost double the size of our entire GDP,” said Ramson.
He also noted that it takes time for production to ramp up to optimum levels. “It almost never goes to the maximum capacity level. Which means that even though your FPSO has a maximum capacity of 120,000 the most times you will have an average of let’s say 100,000 bpd if there is good reservoir management.”

When Jordan spoke on Sunday, he said, “With 17 prospects still to be drilled in the Stabroek Block, Guyana is on target to produce one million barrels per day. Indeed, research analysts at Wood MacKenzie have predicted that Guyana can surpass oil production in Mexico and Venezuela, thereby positioning the country to become, eventually, a power house in Latin America.
Exploration of our off-shore basin will continue apace this year as several licensed operators have signalled their intention to ramp up drilling given the success of ExxonMobil and its partners.
“Production of oil is on target for the first quarter of 2020, but there are good indications that this timetable could be advanced to the last quarter of this year,” Jordan said.
Further to this, the Finance Minister said that Guyana is expected to earn significant revenue, once production begins, which will be used to create jobs in manufacturing, industry and value added agriculture, among other sectors of the economy.
In addition to this, he said that the oil money would be used to improve and expand the physical and social infrastructure of the country.
In this regard, Jordan cited the government’s plans to facilitate and support oil and gas activity, accelerate natural resource development such as bauxite, and connect the hinterland and the coastland.