Govt. working to secure about US$2B from Exxon instead of full coverage insurance

Nov 02, 2021 News

$1.8T Yellowtail Project…

– Liza One, Two and Payara still left exposed

Kaieteur News –Vice President, Dr. Bharrat Jagdeo disclosed to members of the media yesterday that efforts are afoot to secure up to US$2B from ExxonMobil to cover any damage that may result from the US$9B Yellowtail Project, the fourth to be developed in the prolific Stabroek Block.

Vice President, Dr. Bharrat Jagdeo

The government’s pursuit of this US$2B commitment comes on the heels of years of criticisms from Kaieteur News and other industry stakeholders regarding the absence of any formal guarantee from ExxonMobil that it would cover in full, the shortfall of costs associated with an unmitigated spill which are not covered by its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
But with the government only looking to secure a US$2B commitment, it therefore means that the Yellowtail Project will fall into the same bracket of other Exxon-led projects that are without full coverage insurance. These projects are: the Liza Phase One, Liza Phase Two and the Payara Project.
During his press conference, the Vice President specifically said, “As you know we are constantly seeking to improve the permits and …in the one we are looking at in the Yellowtail Project, we are looking for a generic position where the parent company, ExxonMobil, will now guarantee; well we are looking at maybe up to US$2B for any damage caused here… because from the beginning there was no parent guarantee, it was implicit but…that is crucial for us as we move forward.”
The EEPGL, the operator of the Stabroek Block, has explained via the Environmental Impact Assessment (EIA) for the Yellowtail Project that the costs for developing same are expected to be higher since there would be a greater number of development wells and associated drilling costs when compared to its Payara project, which will also cost Guyana $1.8 trillion.
Despite the astronomical costs, Exxon believes that the project should be supported as it would generate benefits for the citizens of Guyana in several ways, which would otherwise not be there in the absence of the project.
According to project documents, Yellowtail will consist of drilling approximately 41 to 67 development wells (including production, water injection, and gas re-injection wells); installation and operation of Subsea, Umbilicals, Risers, and Flowlines equipment; installation and the operation of a Floating, Production, Storage and Offloading (FPSO) vessel in the eastern half of the Stabroek Block; and— ultimately—project decommissioning.
Initial production is expected to begin by the end of 2025–early 2026, with operations continuing for at least 20 years.
The project is expected to employ up to 540 persons during development well drilling, approximately 600 persons at the peak of the installation stage, and 100 to 140 persons during production operations.

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