Fifth oil ship builder paid US$115M before project was approved

May 14, 2023 News

MODEC

Kaieteur News – MODEC, the company responsible for building the floating production, storage, and offloading (FPSO) vessel for the Uaru project in Guyana, earned a significant sum of US$115M in 2022 for its Guyana work. This income was generated through contracts awarded for early studies before government approvals were obtained for the project.

Exxon’s in-country project manager, Anthony Jackson, has said these preliminary studies are necessary to develop a comprehensive field development plan (FDP). The Ministry of Natural Resources (MNR) and the Guyana Geology and Mines Commission (GGMC) collaborated with ExxonMobil and engaged in pre-submission discussions from May to November 2022 to ensure alignment with regulatory frameworks and international best practices. In a statement announcing the approval of Uaru in April 28, the Ministry said the production license application and accompanying FDP underwent an extensive review process by the MNR, GGMC, and an independent consultant procured through the World Bank. It said this review process took over four months, and that the entire approval process lasted more than 11 months.

On November 1, 2022, MODEC, Inc. announced the signing of a contract to perform Front End Engineering and Design (FEED) activities for the FPSO vessel, which will be named Errea Wittu for the Uaru development project. The FEED contract was funded by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), and it aimed to initiate FEED activities for the FPSO design and secure the second M350TM hull for FPSO service. This is where MODEC got its early earnings.

The final investment decisions (FID) and the commencement of the second phase of work were contingent upon the approval of the Uaru project by the Ministry of Natural Resources and the Environmental Protection Agency (EPA) in April.

Under an engineering, procurement, construction, and installation (EPCI) contract, MODEC will construct and install the FPSO in Guyana. The FPSO will be based on MODEC’s M350 new-build design and will have the capacity to produce 250,000 barrels of oil per day, treat 540 million cubic feet per day of associated gas, and inject 350,000 barrels of water per day. MODEC is also expected to operate the FPSO for an initial period of ten years, with potential options for extension. Kaieteur News is not in receipt of information about the value of this contract, but the Uaru project is the most expensive of all Exxon’s development undertakings in the Stabroek Block at a whopping US$12.683B. The Ministry noted that this amount is cost recoverable.

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(GGMC) collaborated with ExxonMobil and engaged, EEPGL, Errea Wittu, FEED contract was funded by ExxonMobil's

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