Exxon defies Govt.’s authority but makes Guyana out to be the bully

Sep 01, 2020 News

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By Kemol King

It is common knowledge that the Payara project, the third of its kind that ExxonMobil intends to develop in the Stabroek Block, has not yet been approved by the Government of Guyana.

Yet, a year ago, the oil major decided that it did not need Guyana’s approval to go ahead and hand out contracts for Payara related works. While the company would claim that such posturing by oil companies is an industry norm, its premature actions now risk increased pollution of Guyana’s natural environment, and makes Guyana out to be the bully for daring to ask for better.
A field development plan is a layout of all of the processes and activities intended to develop an oil field, and the manner in which those will be executed. Before it begins to develop a field, an oil company is required to hand over its plan to the Department of Energy for approval before it gets to work. The Environmental Protection Agency (EPA) must also review an Environmental Impact Assessment (EIA) prepared by the company and determine whether it should issue an environmental permit.
The country has already approved two ExxonMobil Field Development Plans (FDP) for Liza Phases One and Two. Still, last year, the Energy Department realized that it needed a third party to hold its hands through the review process, as explained by Energy Director, Dr. Mark Bynoe.

Guyana had not even hired the UK Consultant, Bayphase yet to review the FDP for Payara, when, in November, Exxon started handing out contracts.
Early in that month, the Dutch firm SBM Offshore announced that it was awarded a contract to perform works for the Prosperity Floating Production, Storage and Offloading (FPSO) Vessel.
Government and Public Affairs Advisor for ExxonMobil Guyana, Janelle Persaud, had told Kaieteur News, “As part of our preparations for the project, we have awarded an initial contract to SBM for a limited release of funds to begin Front End Engineering and Design (FEED) activities and secure a hull for the Payara project FPSO.”
Lack of approval for the Payara FDP did not concern Exxon, nor did it concern SBM Offshore when it decided to make orders pursuant to fulfilling Exxon’s award.

In that month, SBM placed orders for two hulls. The deal was inked with Shanghai Waigaoqiao Shipbuilding and Offshore and China Merchants Industry Holding, for use in the construction of two new FPSOs, including Prosperity.Guyana also later found out, in that very month, that ExxonMobil gave the Italian oilfield services company, Saipem a multi-million US dollar contract for the subsea systems for the Prosperity Floating Production, Storage and Offloading (FPSO) Vessel, proposed for operation at the Payara well. Exxon tasked Saipem with performing the detailed engineering, procurement, construction and installation (EPCI) of a large subsea production facility.
Exxon appeared to have been well satisfied on its own terms that Guyana would approve its Payara FDP with negligible to zero required changes.
In the new year, it became evident that the oil major was pressuring Guyana to grant swift approval for the project. It embarked on a campaign to convince Guyana that if it wanted to be successful, it would approve Payara with haste. The line it attempted to sell was that a delay in approval would result in billions in losses for Guyana. Its Country Manager, Alistair Routledge, even recently threatened that the company would take its money elsewhere if the government moved for any renegotiation.
But experts like International Lawyer, Melinda Janki, and Petroleum Consultant, Dr. Jan Mangal, knew better and advised Guyana to take all the time it needs to ensure the plan is robust. Dr. Mangal had explained that oil companies tend to rush approvals so that they can get away with poor provisions that required less of them, to Guyana’s detriment.
Just as he advised, extremely problematic configurations embedded in ExxonMobil’s Payara FDP were unraveled. These issues were illuminated by the pollution occurring at the Liza Destiny FPSO. ExxonMobil has flared billions of cubic feet of gas this year at the Liza One project. It claims that a defective gas compressor system, undergoing repairs in Germany, is responsible. It has provided no timeline for a solution to end the flaring once and for all. The company is also dumping thousands of barrels of toxic reservoir water into the ocean, despite the fact that international best practices require the reinjection of the reservoir water into the earth. ExxonMobil claims that the issue is not hazardous to the environment.
BayPhase, the UK firm which the former Government hired to conduct the review, did not flag these issues.
Yet, EPA Head, Dr. Vincent Adams, determined to demand better from ExxonMobil, insisted that changes be made to the Payara FDP, where there existed the same loopholes that allow Exxon to commit these environmental infractions at the Liza One project.
But ExxonMobil insists that to redesign the Prosperity in the manner that Dr. Adams requires would be too expensive and inconvenient. This has held up the approval of the Payara project for some time now.
Lo and behold, and to widespread public condemnation, the Irfaan Ali administration decided to send Dr. Adams on leave, effectively removing him from the review process for the Payara project.

 

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