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6th oil project: AFC wants strict timeline for audits, ring-fencing, full protection from Exxon for oil spills
Kaieteur News – As the Government of Guyana (GoG) prepares to award ExxonMobil a sixth licence to develop the Whiptail project in the Stabroek Block, the Alliance For Change (AFC) is calling on the administration to ensure measures are taken for Guyanese to benefit from the vast natural resource.
At its first press conference of the year, the party listed a number of measures that should be taken by government in that regard.
The AFC’s point man on Oil and Gas, David Patterson, was keen to note that by now, Guyanese should be enjoying greater profits from the sector. ExxonMobil Guyana Limited (EMGL) commenced production activities in December 2019 at the Liza One project. Guyana now has three producing projects but continue to see meagre profits.
Patterson explained that due to the absence of a ring-fencing provision, Guyana is yet to enjoy the real value of the 50/50 profit sharing arrangement as the company continues to deduct 75 percent of the income towards cost.
When asked what specific changes should be made by government in approving another project, the Member of Parliament (MP) directed this newspaper to his 34-point amendments to the Petroleum Activities Bill. None of the recommendations proffered by the party were accepted by government and the legislation was passed as is, back in August 2023. The MP pointed out that had government taken on the suggestions, the new principles would have governed the 6th development as well as all future projects.
Patterson in his submission to the National Assembly made a case for timely audits to be conducted. He said, “All audits for money deemed cost recoverable under any production licence shall be completed within nine months of the end of each fiscal year. The Minister shall submit all audit reports to the National Assembly at the earliest possible time thereafter.”
He also recommended that a ring-fencing provision be implemented to avoid the revenues in one project from being used to finance other activities across the Stabroek Block.
Meanwhile, with regards to full protection for the country from an oil spill, the former Minister of Public Infrastructure said, “the licensee shall undertake to provide full liability coverage, inclusive of appropriate insurance and a parent company guarantee which shall be in force for each oil field development.”
These are a few of the key provisions the AFC believes government should consider when approving the 6th project.
According to project documents, the Whiptail development project is pegged at US$13B and will develop the Whiptail, Pinktail, and Tilapia fields, along with potential additional resources, if determined to be feasible and economically viable. The current development plans for the project include drilling via drill ships to produce oil from approximately 40 – 65 production and injection wells. Production is expected to begin between the fourth quarter of 2027 and the second quarter of 2028 with an expected field life of at least 20 years.
According to ExxonMobil, the project will be designed to add up to 275,000 barrels of oil a day to existing daily production volumes in Guyana with the associated additional revenues to the government of Guyana, while continuing a steady expansion of opportunities for Guyanese to participate in the petroleum industry.
Chief policymaker for the local petroleum sector, Vice President Bharrat Jagdeo had said at his first press conference for the year that the project is on track for government approval this quarter.
Jagdeo said he could not confirm a specific date for the approval but assured that it remains on schedule. “I know the assessment is being done by our external consultants,” he said, while cautioning that the process could see Exxon being asked to supply additional information. “I can’t tell you on a daily basis where they are because I don’t track that. But I think that it’s still on track so far for that, for the first quarter,” the Vice President added.
Map showing the Whiptail project offshore Guyana
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