Oil production dips in first quarter despite use of 2nd FPSO

Oil production dips in first quarter despite use of 2nd FPSO – BoG

Jul 06, 2022 News

Kaieteur News – Bank of Guyana (BoG) has reported a decline in oil production for the first quarter of 2022, despite the coming on stream of a second Floating, Production, Storage and Offloading (FPSO) vessel, the Liza Unity.

The information is contained in the Bank of Guyana’s quarterly financial report for 2022, documenting the financial affairs of the country up to March pointed to, “a marginal decline in the production of oil.”

Bank of Guyana Governor, Gobin Ganga

It was reported that the decline in production was as a result of scheduled maintenance for the first FPSO—the Liza Destiny. The Liza Destiny began production in December 2019 with an installed capacity of 120,000 barrels of oil per day (bpd) but had been producing as much as 130,000 bpd following its debottlenecking exercise.

As for the Liza Unity, Guyana’s second FPSO, which began pumping oil in February this year, that too is also poised to be optimised so that it can achieve production above its nameplate capacity of 220,000 barrels of oil per day.

It was reported that a third ship, Payara, is also scheduled to come on-stream with a production capacity of 220,000 bpd 2024 but that has since been moved up to the fourth quarter of 2023.
A fourth project – the Yellowtail—is also being developed with a capacity of 250,000 bpd with first oil planned for the end of 2025.

That vessel is expected to bring the country’s total nameplate production capacity to 800,000 bpd. Over the course of the first two years of production, government managed to rake in a total of US$638,520,554 in profit in 11 tranches for the reporting period from 2020 to February of this year. It was noted, however, that profit oil receipts are derived from government’s lifts of oil earned as profit.

As it relates to royalties, these are paid on a quarterly basis, 30 days following the end of each quarter.

For the period April 28, 2020 to January 27, 2022, Guyana received US$81 million in royalty payments, from the two percent deal it signed with US oil major, ExxonMobil, back in 2016.

The report by BoG comes even as former Executive Member of TIGI, Mr. Alfred Bhulai, in a letter to this publication called for Guyana’s oil production data to be made accessible.

The transparency advocate is of the view that Guyanese are paying for the Liza Destiny and Liza Unity Floating Production Storage and Offloading (FPSO) vessels operating in the Stabroek Block and as such should have verifiable information on the oil being pumped. Bhulai noted that Guyanese should not be depending on what is reported by the oil companies without no way of fact checking the information.

According to Bhulai, the citizens are completely unaware of what value they are getting for their dollars, as information pertaining to the levels of production, among others, are not readily available for public scrutiny.

Presently, the public is free to view the revenue accumulated from oil production, through the Ministry of Finance’s website. However, there are no reports on how much of the resource is being removed from below the seafloors, as well as other technical data.

Bhulai has been vocal on several matters pertaining to the environment, but while serving on the watchdog organisation, he detailed that a one hour meeting was held with the subsidiary company of ExxonMobil, Esso Exploration and Production Guyana Limited (EEPGL), on February 12, 2021, during which the Chief Executive Officer (CEO), Alistair Routledge pointed out that the company wanted to be transparent.

However, when questions were put to the company, it said that the details would be shared with the government. Unfortunately, after waiting for a full year for those details, Bhulai said his hopes of accessing the same had faded.