Opposition not optimistic about more benefits from Exxon’s 6th Project

Sep 09, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Although it has called on government to pursue more benefits for Guyanese from the sixth oil project currently pending approval, the Opposition said it is not optimistic the government will heed to its calls.

Leader of the Opposition, Aubrey Norton on Friday during a virtual press conference said, “The government is not expected to respond positively. Our approach is, we are working to become the government, we believe we will become the government; we have a clear idea as to what we want.” To this end, Norton said a government under his leadership would ensure citizens benefit more from the resources discovered in the Stabroek Block.

He was at the time responding to a question from Kaieteur News on what steps he is willing to take should government refuse to budge on calls made from his side of the political divide for the sixth project to include more royalty and a ring-fencing provision.

It was the Economic Advisor to the Opposition Leader, Elson Low that explained the 10 percent royalty other oil companies will be subjected to, in the new Production Sharing Agreements (PSAs), should also be applied to Exxon for the new development. In addition, he pointed to the need for government to introduce a ring-fencing provision to safeguard the revenue generated in that field.

A ring-fencing provision would prevent oil companies from using revenue generated from a production field to offset costs in another project. In the absence of such a provision, ExxonMobil have been using the proceeds from the Liza One and Liza Two projects, currently producing about 400,000 barrels of oil per day, to pay for costs related to other Stabroek Block projects.

Though a ring-fencing provision is not catered for in the 2016 PSA, government can include this clause in the Environmental Permits, it grants to Exxon for each new project. So far, Guyana has already approved five projects for the oil giant without this provision.

On Friday, Norton said, “There are positives to ring-fencing (and) there are negative elements to it, we will analyze each case, case by case and make decisions that are in the interest of the people of Guyana.”

The sixth project, Whiptail is the largest oil project yet. It is pegged at a whopping US$12.9 billion and seeks to develop the resources discovered in the Whiptail, Pinktail, and Tilapia fields of the Stabroek Block. These fields are approximately 1,500 to 2,200 meters deep.

The project will see the development of multi-million barrels of oil resources by drilling approximately 33 to 72 development wells (including production and water/gas injection wells). It will also see the installation of a Floating Production, Storage, and Offloading (FPSO) vessel to process, store, and offload the recovered oil. Currently, the FPSO’s basic design has an upper production limit of 263,000 barrels per day (bpd).

Given the vast resources to be extracted from the project, the Opposition had called on government to take a stand for the citizens of Guyana in approving Exxon’s new development.

The Opposition’s call came on the heels of a dismissive response from Vice President Bharrat Jagdeo when asked about what additional fiscal benefits citizens can look forward to from the new development that is currently pending approval.

During his August 31, 2023 press conference hosted at Office of the President, Georgetown, the VP refused to provide a response to the specific query from Kaieteur News. He would only say, “Asked and answered a hundred times before, 100 times before. I am not gonna go through this again.”

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benefits, more, oil, opposition, sixth project

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