Latest update December 17th, 2024 3:32 AM
VP Jagdeo not worried if over US$40B oil projects overwhelm Guyana’s monitoring capacity
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Kaieteur News – Vice President, Dr. Bharrat Jagdeo does not share concerns that the government’s speedy approval for oil projects in the Stabroek Block could outstrip the country’s already thin monitoring capabilities. According to the chief policy maker for the oil industry, authorities have an implicit understanding with ExxonMobil and its partners that it will have as much time as may be need to scrutinize and contest any and all costs associated with the block.
Vice President, Dr. Bharrat Jagdeo
During a press conference on Thursday, Jagdeo reminded that since the government is not a co-manager, the Stabroek Block’s expenses are looked at ex-post. He noted however that there is no time limit for the examination of costs though the Stabroek Block Production Sharing Agreement (PSA) ascribes a two-year deadline for this exercise. Dr. Jagdeo said, “There is no time limit for remedial action and for recovery for expenses that may have not gone towards cost recovery under the PSA that don’t fit the definition you can recover.”
Given his government’s push for local content as well as its refusal to rely heavily on foreign help on this front, he admitted that the audits are not up-to-date. He noted however that this is a work in progress.
Kaieteur News previously reported that there are two audits that remain in the finalization stage: one for the pre-contract costs totalling US$1.6B and another for US$7.3B in expenditure incurred from 2018 to 2020.
With respect to concerns that the pace of investments could lead to an overheating of the economy, the Vice President said for the time being, this is not the case. He argued that most of the investments go abroad with small elements of it retained here. This is the case since Guyana does not have the technical nor technological expertise and industries to support the development of the oil sector on its own. He noted however that the government remains mindful of the impact of investments on the economy.
Exxon Mobil and its partners currently have five sanctioned projects in the Stabroek Block which are worth over US$40B. The most recent project that was approved was for the Uaru Project. It will have a production capacity of approximately 250,000 gross barrels of oil per day with production targeted to startup in 2026.
The US$12.7B development will target an estimated resource base of more than 800 million barrels of oil and include up to 10 drill centers and 44 production and injection wells. MODEC, a Japanese firm, is constructing the floating production, storage and offloading (FPSO) vessel for Uaru, which will be called Errea Wittu, under an Engineering, Procurement and Construction (EPC) contract.
As for ongoing Stabroek Block projects, the Liza Phase 1 and Liza Phase 2 developments produce 150,000 barrels of oil and 220,000 barrels of oil per day respectively.
The third sanctioned development on the Stabroek Block, Payara, is targeted for startup early in the fourth quarter, with a gross production capacity of approximately 220,000 barrels of oil per day.
The fourth sanctioned development, Yellowtail, is expected to come online in 2025 with a gross production capacity of approximately 250,000 barrels of oil per day.
A sixth development, Whiptail, is expected to be submitted for government and regulatory approval later this year.
In total, six FPSOs with a gross production capacity of more than 1.2 million barrels of oil per day are expected to be online on the Stabroek Block by the end of 2027, with the potential for up to 10 FPSOs to develop the estimated gross discovered recoverable resources of more than 11 billion barrels of oil equivalent.
The Stabroek Block is 6.6 million acres. ExxonMobil affiliate Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.
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