Questions on that US $10B Bill for oil industry

Dec 15, 2019 Letters

Dear Editor,

Reference is made to your advertisement as well as front page story on scrutinizing the preparation costs of Liza I and 2 for oil in which Guyana is being billed some US$10B. How will Guyana be able to pay this bill? It will take many, many years before we can pay off this debt.
As I read in news reports, similar preparation and development of oil & gas in deeper waters just off the coast of Brazil costs substantially less. Obviously something smells fishy in this bill. It must be investigated. A forensic audit is needed. International forensic experts and lawyers in the oil business must be sourced to scrutinize every aspect of this bill.
I also note that the FPSO (Floating Production and Storage Offloading) vessel was built by Exxon (in Singapore) and billed to Guyana for US $1B. Similar vessels with larger capacity was built for other countries at half the cost. This also smells fishy and needs scrutiny and forensic audit.
Just for public understanding, a FPSO is a floating offshore vessel used by energy companies for production and processing of hydrocarbons (oil and gas)..It brings up oil from under the seabed, process, and stores it. Then the oil is transferred (offloaded) to tankers. A FPSO can be built from an old or used oil tanker. In fact, KN reported that Guyana’s FPSO for Liza 1 is built from a used tanker.
The cost of an FPSO varies depending on depth and volume. A new FPSO can cost between US$200 and $500M. A used tanker converted into a FPSO will cost substantially less. Investopedia states that a purpose-built FPSO producing some 250,000 barrels per day (BPD) costs around $800M. The Liza 1 FPSO can produce around 100K BPD and it is a used tanker. Clearly, there are problems with the bill of $1B.
It is estimated that the cost of Guyana’s FPSO can’t even come close to US$1B. So why was the country built $1B and why is there no investigation? Drawn your own conclusion! Unless the FPSO for Liza 1 is scrutinized thoroughly, the bill for the LIZA 2 FPSO will be even higher.
Yours truly,
Dr. Vishnu Bisram

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