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Japanese company profits US$800M from Guyana for FPSO order last year
…annual leasing costs not included
Kaieteur News – Japanese shipbuilder MODEC reported revenues of US$800 million in 2023 related to its Guyana work, which accounted for about a quarter of all its US$3.57 billion revenues for the year.
FPSO
The company had successfully secured an order for the Uaru project from ExxonMobil. Under the engineering, procurement, construction and installation (EPCI) contract, MODEC will deliver the Errea Wittu floating production, storage and offloading (FPSO) vessel to the Stabroek Block. Notably, the revenue made by the company on the order does not include annual leasing costs which are likely to kick in once the ship is up and running.
The Uaru FPSO is expected to play a pivotal role in Guyana’s oil sector, with first oil anticipated in 2026. With an oil production capacity of 250,000 barrels per day (bpd) and a gas production capability of 540 million standard cubic feet per day, alongside a storage capacity of 2 million barrels of crude, it will be one of the largest FPSOs globally. This capacity sets the stage for the project to be one of the highest revenue-generating projects undertaken offshore Guyana, significantly impacting the nation’s oil production capacity. With the Uaru project’s operation, Guyana’s offshore oil production is set to exceed the 1 million barrels per day mark.
MODEC had entered into a joint venture so it could be better equipped to deliver larger FPSOs. Offshore Frontier Solution Pte. Ltd., a MODEC Group Company and a joint venture with Toyo Engineering Corporation, is responsible for delivering the FPSO Errea Wittu, which will utilise MODEC’s M350TM new-build hull.
The oil projects producing offshore will continue to reap billions of US dollars annually. Most of the proceeds, however, have been leaving Guyana, primarily benefiting Exxon and its partners. This is attributed to the terms of the Stabroek Block Production Sharing Agreement (PSA) signed between the previous government and Exxon. Despite the significant revenues generated by projects like Uaru, there continues to be growing scrutiny over the fairness of the distribution of wealth derived from Guyana’s oil reserves. Vice President Dr. Bharrat Jagdeo said that revenues will increase in the next few years.
In addition to the Uaru project in Guyana, MODEC’s 2023 financials were supported by three other significant EPCI projects, namely the Raia, Bacalhau, and Sangomar FPSOs, contributing to a total EPCI earnings of approximately US$2.5 billion for the year. The Raia and Bacalhau projects were commissioned by Equinor in Brazil, and the Sangomar project was ordered from MODEC by Woodside Energy for Senegal. None of these projects earned more revenue for MODEC than the Uaru project.
The Guyana FPSO also has the highest oil production design capacity of them all. The FPSO Sangomar is designed to produce 100,000 barrels of oil per day, with a storage capacity of 1.3 million barrels and a gas production capability of 130 million standard cubic feet per day. In Brazil, the FPSO Bacalhau is set for first oil in 2025, with a capacity to produce 220,000 barrels of oil and 500 million standard cubic feet of gas per day. The Raia FPSO, aiming for first oil in 2027, will have a similar storage capacity with an output of 125,000 barrels per day.
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