Secrecy surrounds costs and licenses for oil exploration offshore Guyana

Apr 30, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – As transparency advocates continue to demand more disclosures from the government of Guyana and oil companies about the petroleum sector, the secrecy of costs and terms associated with oil exploration campaigns remains problematic.

ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has made more than 30 commercial discoveries of oil and gas offshore, with few dry holes. Other companies have also explored blocks offshore Guyana. The Ministry of Natural Resources said recently that the number of discoveries of oil offshore is 44. As most of those are in the Stabroek Block, ExxonMobil and its co-venturers will be permitted to recover those exploration expenses. But how can Guyanese keep track of the recovery of these expenses if they don’t know?

The Stabroek Block Production Sharing Agreement (PSA) allows companies to recover their costs up to a 75% ceiling. It is expected that once costs have been recovered substantially, the share of revenues accruing to Guyana every year would increase. But while Guyanese are able to keep track of development costs to an extent, the same does not obtain for exploration costs.

It is public knowledge that the development projects being led by ExxonMobil are estimated to cost more than US$40 billion. Liza Phase One cost US$3.6 billion to develop. Phase Two required US$6 billion. Payara received an injection of US$9 billion. Yellowtail costs US$10 billion. Uaru will cost US$12.7 billion.

But what is the total of all Exxon’s exploration expenses that are being recovered?

A stark contrast is observed between the transparency of development costs and permits, and the transparency of exploration costs and permits. The government has released the environmental permits and production licenses for all of ExxonMobil’s sanctioned Stabroek Block programs, but not its exploration.

How the government is regulating oil companies’ exploration campaigns is just as important as the regulation of development in multiple respects. Especially with focus continuing to be placed on protecting Guyana against the dangers and costs associated with oil spills that could occur during production, it is apposite to note that grievous accidents can also occur during oil exploration.

It is only recently, given the increased focus on environmental impacts, that there is more public discourse about exploration programs. The Environmental Protection Agency (EPA) is responding to requests by EEPGL to ramp up exploration, by requesting that consultants are hired to conduct studies. EEPGL is waiting for the EPA to approve a 35-well exploration campaign for the Stabroek Block, and a 24-well campaign spanning the Kaieteur and Canje blocks.

Information sharing about the terms and costs of exploration in Guyana will be even more critical when the government gives out blocks as the auction winds up later this year. The government could issue up to 14 offshore blocks, unleashing a massive expansion of studies and exploration campaigns outside of the Stabroek Block over the next few years.

companies, ExxonMobil, Government, Guyana, Stabroek Block

Latest News

Secrecy surrounds costs and licenses for oil exploration offshore Guyana

Related

Similar Articles

The Glenn Lall Show | November, 20th, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Green Machine returns to RAN Sevens

GASA snubs Delroy Tyrrell for World Championships

Cricket Australia appoints former West Indian...

GBA appoints International Technical Officer...

Warriors triumph but Royals lead standings

D-Up Basketball Academy Training camp brings...

Features/Columnists

A false panacea for electoral integrity

Rising Gun Crimes in the Caribbean: Urgent Action required by all

President Ali’s tough love

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

Secrecy surrounds costs and licenses for oil exploration offshore Guyana

Share this:

Related

Similar Articles

The Glenn Lall Show | November, 20th, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]