Hess plugs $1.8B to develop Payara

Oct 04, 2020 News

Kaieteur News – Hess Corporation announced that it has plugged US$1.8B into the Payara project.
The company, which has a 30 percent stake in Guyana’s lucrative Stabroek block, made its final investment decision (FDP) for the Payara development offshore Guyana, shortly after Guyana gave the greenlight on Wednesday.
The Payara project is the third phase of development in the Stabroek block.
The company said that the US$1.8B figure represents a forecast of its net share of development costs among the three joint venture partners, excluding pre-sanction costs and the purchase cost for the Prosperity Floating Production, Storage and Offloading (FPSO) vessel. This, Hess said, is spread out over a few years, approximately US$250 million in 2021, US$450 million in 2022, US$500 million in 2023, US$300 million in 2024 and US$225 million in 2025.
“The timing of the FPSO purchase is being evaluated.” Hess stated.
“We are excited to sanction our third oil development on the Stabroek Block,” Hess CEO John Hess said. “We thank the Government of Guyana for their support and look forward to realizing the full potential of this world class resource.”
ExxonMobil, with a 45 percent operating interest in the block, awarded contracts to Dutch firm, SBM Offshore and French company, TechnipFMC. SBM is expected to construct and lease the Prosperity vessel, while TechnipFMC was awarded a large subsea contract. The contracts total more than US$1B.
The investments were made after a contentious review process, linked to ExxonMobil’s environmental infractions in the Stabroek block.
It remains to be seen the magnitude of CNOOC’s final investment decision, with a share of 25 percent of the interest in the block.
ExxonMobil said that the total development cost for the block is US$9B. Despite having project characteristics very similar to Liza Two, Payara’s cost estimate is US$3B higher.
Vice President, Dr. Bharrat Jagdeo on Friday boasted that the permit for the Payara project requires ExxonMobil to disaggregate the costs for the project, for government’s perusal. However, Government has announced no plans yet for how and when it will conduct the cost audit.
The Payara project, slated for a 2024 startup, will follow Liza Two in 2022 and take Guyana’s production up to 560,000 barrels of oil per day.
Hess said that the joint venture partners are evaluating more development opportunities, including Yellowtail, Redtail, Mako and Uaru. These developments could quickly allow the consortium to meet its goal of 750,000 barrels of oil per day in the Stabroek block by 2026.
The 18 discoveries made by Exxon add up to over 8 billion oil-equivalent barrels in the block. The joint venture partners have managed to get away with a gathering of terms to explore and produce in the block, so generous that Guyana is at the top of their portfolios and looks set to ride out the COVID-19 pandemic with no chance of divestment.

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