Govt. announces plans to survey potential resources in offshore blocks

Jan 18, 2024 ExxonMobil, News, Oil & Gas

Map of Guyana’s Stabroek Block

With Exxon due to relinquish 20 percent of Stabroek Block in October…

Kaieteur News – Senior Finance Minister, Dr. Ashni Singh announced on Monday during his 2024 budget, that the government will be undertaking key survey studies on the offshore blocks to better assess the potential petroleum resources available for development and production.

It is likely that this survey will target a 20 percent portion of the Stabroek Block which the government said ExxonMobil and its partners must relinquish in October. Notably, this deadline is well beyond the contractual timeline of the Stabroek Block Production Sharing Agreement (PSA) which, according to its provisions, stipulate that a portion be returned to the State since last year October.

It would be recalled that Exxon had approached the David Granger-led administration back in 2020 for an extension of the timeline, claiming that it would be facing debilitating effects from the COVID-19 pandemic. Granger had granted the extension on the condition that a review would be done to ascertain if the extension is indeed warranted. When the PPP/C Government took the reins of power in August 2020, its Vice President, Dr. Bharrat Jagdeo subsequently said authorities were satisfied that Exxon’s operations for the Stabroek Block were affected and allowed the extension to remain intact.

While the Finance Minister did not state which blocks would be subjected to this review, it is unlikely that it would include those blocks which companies previously returned to the State such as the Kanuku Block by Repsol, and the Demerara and Berbice Blocks by CGX. Those offshore concessions, by virtue of the work programmes outlined by their PSAs, benefited from seismic surveys, the data for which was shared with Guyanese authorities.

Speaking to other developments in the oil sector, Minister Singh said Guyana’s oil and gas sector expanded by 45.9 percent last year with the production of 142.9 million barrels of oil compared with 101.4 million in 2022. This he said is the result of improved performance from the Liza Destiny and Unity floating, production, storage and offloading (FPSO) vessels operating in the ExxonMobil-operated Stabroek Block. Minister Singh also said that the commencement of production from the Prosperity FPSO in November of last year, was also a contributor to this output.

Expounding further, in 2023, Minister Singh said the Liza Destiny FPSO produced crude oil at a rate of approximately 142,000 barrels per day (bpd), and the Liza Unity FPSO produced at a rate of 235,000 bpd.

Minister Singh said encouraging accelerated production is integral to government’s plan to, among other things, secure more revenue from the sector to accelerate its development agenda. Towards this end, he said 2023 saw a ramp-up in volumes from the Destiny and Unity production platforms, while the Prosperity FPSO achieved first oil in November 2023. These three facilities are expected to continue their momentum in 2024.

Moreover, Minister Singh said advancements at Exxon’s fourth project in the Stabroek Block called Yellowtail Project is on track for start-up in 2025. With another oil project on stream for 2027 and a sixth in train for 2027, pending regulatory approval, Minister Singh said production could climb well above 1.3 million barrels per day (bpd) beyond 2027. This he said would make Guyana the single largest non-OPEC contributor to global supplies.

It would be recalled that the Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 13 oil-producing nations, founded in 1960. Its members include countries like Saudi Arabia, Iraq, Iran, and Venezuela, among others. OPEC’s primary objective is to coordinate and unify petroleum policies among its member countries, in order to secure fair and stable prices for petroleum producers and a reliable supply of oil for consumers.

While Guyana is not a member of OPEC, its oil production is becoming increasingly influential in the global supply of petroleum. This prominence in oil production, outside the influence of OPEC’s policies and decisions, underscores Guyana’s growing importance in the global energy sector.