Foolish for Govt. to ignore the size of its oil reserves – Opposition

Mar 25, 2024 News

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…says Jagdeo must be laughing stock of ExxonMobil
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“Assessing reserves and producing oil are not mutually exclusive processes. Decisions to produce oil depend on the quantity, quality, and accessibility of reserves. To know these and other parameters about reserves- and the oil reservoirs that contain them- requires appraisal. Companies do not make massive investments in oil production based only on wildcat wells. So, for the VP to try to encourage Exxon to bypass the appraisal stage must be the butt of jokes in the Headquarter of the oil company both in Georgetown and in Houston.” – Opposition
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Kaieteur News – In its wild rush to accelerate the production of oil in the prolific Stabroek Block, the Government of Guyana (GoG) has charged ExxonMobil, the operator of the block to focus less on appraising the wells to better understand the quantity of petroleum found and to instead concentrate on monetizing the resources.

This policy, as communicated to the nation by Vice President Bharrat Jagdeo, is “absolutely foolish” according to the Opposition. On Sunday, the Office of the Opposition Leader said the deficiencies of Jagdeo, who functions as government’s “oil czar” continues to be exposed and pose growing risks to the country’s financial, economic, and environmental wellbeing.

The political group noted that Jagdeo at his most recent press conference explained that it was “nonsense” to know the reserves without moving to production. The Vice President had said, “Knowing reserves without converting it into production is nonsense because we already know we have 11 billion barrels of reserves and it will keep growing but what’s the point about knowing any, about reserves”.

Jagdeo was responding to an earlier statement issued by the Opposition, in which it argued that keeping Guyanese in the dark on oil reserves is disrespectful and unacceptable. The Opposition had also called for government to release the projected cash flow from the five projects sanctioned to date in the Stabroek Block, as this would arm citizens with the knowledge of the extent and rate at which ExxonMobil is expected to recoup its investments.

The Opposition said Jagdeo deliberately misinterpreted the statements but went on to expose why he is “dangerously unfit to be anywhere near the industry”. “In his ploy to brush aside these demands, Jagdeo uttered some of his most outrageous comments yet on the oil industry…To paraphrase him: it is nonsense to ask about oil reserves, as the focus must be on production. He added that while the company does submit updated data on reserves, that is of no interest to him because his focus is so much on production that he is even trying to get Exxon to skip drilling appraisal wells and other such things,” the Opposition reasoned.

The political group argued that this latest absurdity by the VP exposes the crisis in which Guyana’s oil sector finds itself. The Opposition pointed out that as a nation, knowing the total oil reserves is vital to plan for the long-term future of the economy and plan for the long-term viability of the Natural Resources Fund (NRF).

This information is also important to guide in drafting a national oil extraction policy, if necessary, and to quantify projected workforce and local content needs in the sector. The Opposition added, that the updated reserves are also important in planning the country’s long-term energy security, assessing the potential for future natural gas production, plan for targets and commitments under Net Zero, and plan for the exhaustion of oil reserves.

It explained, “Assessing reserves and producing oil are not mutually exclusive processes. Decisions to produce oil depend on the quantity, quality, and accessibility of reserves. To know these and other parameters about reserves (and the oil reservoirs that contain them) requires appraisal. Companies do not make massive investments in oil production based only on wildcat wells.” Consequently, the Opposition said that for Jagdeo to try to encourage Exxon to bypass the appraisal stage must be the butt of jokes in the Headquarter of the oil company, both in Georgetown and in Houston.

The political group believes that the government has no intention of releasing information on reserves to the public in spite of its obligations under the constitution and the Extractive Industries Transparency Initiative (EITI). It said, “At the moment, the country is at the mercy of the glaringly limited capabilities of one man. It is a high-risk situation given the billions of US-dollars involved and the legitimate aspirations of the Guyanese people.”

The Opposition added that to safely and sensibly manage the oil sector, the Coalition government will establish a Petroleum Commission with the competent professionals; in the meantime, it said it will continue to press for the protection of Guyana’s natural endowment.

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• appraisal, foolish, oil, opposition, reserves

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