Defiant ExxonMobil gives out another contract despite Govt. puts field plan on hold

Nov 17, 2019 News

…tells Saipem to design & make purchases in the mean time

Guyana’s Department of Energy (DoE) and the Environmental Protection Agency (EPA) are yet to sanction the development of a third oil field in the Stabroek Bloc at the Payara site but this has not stopped the operator from handing out yet another multi-million-dollar contract.

Esso Exploration and Production Guyana Ltd. (EEPGL)—ExxonMobil’s Guyana subsidiary gave Italian based Saipem, a multi-million US dollars contract, for the subsea systems.

Having never developed oilfields in Guyana and acknowledging a lack of know-how in the industry, DoE’s Director, Dr. Mark Bynoe, had placed approvals for the Payara Field Development Plan (FDP) on hold, in order to hire a third party to vet the proposal.
Guyana decided to hire somebody to tell the country, if the plan submitted by ExxonMobil, is in keeping with the best interests of the country and not necessarily the company.
Dr. Bynoe in qualifying the DoE’s position, pointed to the initial reviews for the Liza 1 and Liza II oil fields where Guyana effectively did not have a say and the “lessons learnt.”
New Contract
A defiant Esso Exploration and Production Guyana Ltd. (EEPGL)—ExxonMobil’s Guyana subsidiary—this past week however, gave Italian-based Saipem, a multi-million US dollar contract, for the subsea systems, for the still to be approved Liza Prosperity.
That Floating Production, Storage and Offloading (FPSO) vessel is proposed for the Payara project in the Stabroek block offshore Guyana.
Saipem’s Chief Executive Officer (CEO), Stefano Cao, confirming the announcement on Thursday last said, “…the award of this new contract strengthens Saipem’s presence in Guyana.”

Saipem’s Chief Executive Officer, Stefano Cao

According to Cao, “The long-term basis of our cooperation with our clients is at the very foundation of our business model.”
“Working with ExxonMobil, especially on the continued oil and gas development projects in Guyana, represents both an opportunity and a responsibility to preserve our relationship with stakeholders through sustainable performance.”
This latest contract to be handed out by ExxonMobil Guyana—for the still to be approved oil field—is in addition to a recent Front End Engineering and Design (FEED) contract given to SBM Offshore for Liza Prosperity.
SBM Offshore is the company that constructed and supplied the first FPSO—Liza Destiny and is currently also building the second—Liza Unity.
Contract Scope
The contract handed to Saipem, comes in the absence of an approved formal Field Investment Decision (FID), in addition to DoE’s sanctioning of the submitted Field Development Plan (FDP).
According to the contract scope, Saipem will perform the detailed engineering, procurement, construction, and installation of a large subsea production facility that will include 130 km of flow-lines, risers, associated terminations and jumpers together with the installation of manifolds, flexible risers, dynamic and static umbilical, and flying leads.
Testing and pre-commissioning of the subsea field will follow installation.
According to reports, the company, before obtaining the necessary Government approvals and project sanction, had been directed through the contract to start ‘limited’ activities, namely detailed engineering and procurement.
This means, the company has been contracted and directed to begin at least, the designing and purchasing of required subsea apparatus
Saipem was awarded earlier subsea contracts for the first two phases of the Liza development in Guyana by EEPGL in 2017 and in 2018,
The Payara discovery where ExxonMobil is hoping to develop a third oil field in the Stabroek Bloc, is located northwest of the Liza Phase 1 project.
According to reports, Saipem vessels FDS2 and Constellation will perform the offshore operations using a combination of different pipelay methods.
Furthermore, Saipem has been awarded certain variation orders for additional works linked to ongoing offshore E&C projects in Saudi Arabia, Azerbaijan and in the North Sea. Saipem puts the overall value of the aforementioned contracts, together with the Guyana contract, at $880 million.

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