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Uaru project to carry Exxon’s investment in Guyana to over US$40B
Kaieteur News – By the time Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana makes its final investment into its fifth project (Uaru), the oil major’s spending here will top over US$40B.
This revelation was made by ExxonMobil Guyana President, Alistair Routledge on Wednesday, during his address at the second Guyana International Energy Conference and Expo 2023 at the Marriott Hotel, Georgetown.
ExxonMobil Guyana President, Alistair Routledge
Routledge said: “I know there have been some questions, often people here in Guyana (talk about) the numbers… (Exxon’s) investment levels.” To this end he stated that Exxon has pumped some US$30B into its operations in the Stabroek Block, with regard to the development of the Liza I, II, Payara and Yellowtail projects. The Exxon official disclosed that the four projects, along with works on the Wales West Bank Demerara Gas to Energy (GTE) Project, cumulatively account for US$30B in Foreign Direct Investment in Guyana, by the ExxonMobil led consortium.
During his address to the gathering, Routledge said: “By the time we make the final investment decision on the Uaru project, we will be in excess of US$40B.” The Uaru project is the oil major’s fifth project in the prolific Stabroek Block which has 11 billion proven barrels of oil. The Uaru field which holds over 1.3 billion barrels of oil is expected to cost Guyana over GY$2.6T (US$12B).
It must be noted that government due to its failure to audit bills submitted, has to pay some US$11B for the Liza I & II projects, in addition to pre-contract costs. It would mean that ExxonMobil has been deducting money out of cost oil to service those payments.
This publication recently highlighted that while Guyana managed to pay back Exxon and its partners, Hess and CNOOC approximately US$4B for the Liza 1 project – in the absence of ring-fencing provision in the 2016 Production Sharing Agreement (PSA) Guyana signed onto with Exxon the country is still receiving a meagre 12.5 percent in profits, instead of reaping 50 percent of the profits from that project.
Presently, Guyana shares revenue with ExxonMobil after the company deducts 75 percent towards the cost incurred to develop the resources in the Stabroek Block. This arrangement, with the lack of ring-fencing, sees Guyana paying for projects that are yet to commence production activities.
Each month bills from future producing developments are added to the list of expenses to be cost recovered by Exxon. After the 75 percent is deducted to pay back the oil company, Guyana then shares 50/50 of the 25 percent remaining with Exxon as profits. This amounts to 12.5 percent of profits from the operations.
A passionate and almost angry Bharrat Jagdeo while functioning as Leader of the Opposition, just over three years ago, had said in an interview that the then A Partnership for National Unity + Alliance For Change (APNU+AFC) Coalition government “sold” the country to “foreigners” because that administration failed to include ring-fencing to shore up profits from the 2016 PSA with Exxon. However, soon after taking office in 2020, the now Vice President (VP) has not only changed his tune but also his tone when it comes to the renegotiation of the Exxon contract and securing greater benefits for Guyanese.
- Alistair Routledge, Esso Exploration and Production Guyana Limited (EEPGL), ExxonMobil, Guyana, Stabroek Block
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