ExxonMobil commences design for 7th project as Gov’t remains ‘iffy’ over approval

Nov 25, 2024 News

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Kaieteur News- While the government of Guyana (GoG) remains ‘iffy’ over the approval of a seventh deepwater development in the Stabroek Block for oil major, ExxonMobil, the company is charging ahead with preparations for the project it hopes to start up by 2029.

This is according to a public document that was released by the Environmental Protection Agency (EPA) for the project, Hammerhead. The Terms and Scope for the Environmental Impact Assessment (EIA) that has been ordered by the regulator indicates that ExxonMobil is currently in the design phase for the planned development.

The document states, “The Project is currently in the early stages of design and will be optimized through the engineering process.” Previously, ExxonMobil moved to award contracts for projects yet to be sanctioned by government. This was the case with its most recent development, Whiptail, the oil major’s sixth Stabroek Block project.

In November last year, it was reported that ExxonMobil awarded a contract to Italian engineering powerhouse, Saipem, for the proposed US$12.9 Billion project while awaiting approval from the GoG.

Another multi-billion-dollar contract for the Whiptail project was awarded to SBM Offshore to perform front end engineering and design (FEED) for Guyana’s sixth floating, production, storage and offloading (FPSO) vessel prior to its approval.

When questioned about its modus operandi, ExxonMobil made it clear that it was so confident in the regulatory systems of Guyana that it has no qualms in awarding US-multibillion-dollar contracts in the absence of the relevant project approvals.

In fact, the company’s Country Manager, Alistair Routledge said all it needs to do is provide the right “material” and “answers” to government to make the system “dependable”.

During a press conference last year, Routledge explained, ““the procurement process is separate from the regulatory process. All we are doing there is going through and aligning in such a way that we are ready to move forward as of when we receive regulatory approval.”

The Exxon official told reporters that while there is risk with making such huge investments prior to receiving government’s blessings, the company sees it as an “acceptable risk” since they believe the process to be “dependable” when it comes to sanctioning projects in the Stabroek Block.

“So yes, we are taking a little bit of risk on our side because the FDP (Field Development Plan) hasn’t been approved, but we view that that’s an acceptable risk given that we’ve seen the kind of regulatory process – its dependable as long as we provide the right material, the right answers to the government then we found that to be dependable,” Routledge said.

He was keen to note however that Exxon may not take such investment decisions in other countries since it does not share the same confidence of a dependable process elsewhere.

Gov’t iffy

It should be noted that while Exxon has made an application to the GoG for its seventh project, the Chief Policymaker for the sector, Vice President, Bharrat Jagdeo had made it clear that there is no guarantee approval would be granted.

During a press conference in August, Jagdeo when questioned on the seventh project said, “When and if…if and or when and if we approve the project then you will be told about what the benefits will be.” At that time, the former Head of State said the company had not yet made an application for the project. Following the official application by the company, Jagdeo was again asked to comment on the project when he announced that government has discontinued an advertisement for a consultant to review the Hammerhead project. According to him, the information the company presented was incomplete.

About Hammerhead

Hammerhead is located in the south-central portion of the Stabroek Block, approximately 160 km from Georgetown. Current plans include drilling via drill ships to produce oil using approximately 14 to 30 production and injection wells. Production is expected to begin in 2029 subject to the necessary regulatory approvals and operate for at least 20 years.

In the Project Summary submitted by Exxon to the EPA, the company explained that the project is expected to add 120,000 to 180,000 barrels of oil per day production capacity. The Floating Production Storage and Offloading (FPSO) vessel will be capable of storing approximately 1.4 to 2 million barrels of oil. Third-party oil tankers will be scheduled to offload the oil from the FPSO, making the oil available for export to the international market. To date, Exxon has obtained approval from the Government of Guyana for six development projects in the Stabroek Block – Liza Phase One, Liza Phase Two, Payara, Yellowtail, Uaru and Whiptail. The first three projects are already producing oil at a daily estimated rate of 640,000 barrels per day (bpd).

(ExxonMobil commences design for 7th project as Gov’t remains ‘iffy’ over approval)

(ExxonMobil commences design)

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• design, ExxonMobil, Hammerhead, iffy, project

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