Hess hopes govt. 7th oil project will be approved by April 

Jan 09, 2025 News

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– says despite project’s smaller production capacity, company will still earn because of lopsided contract

Kaieteur News-  Hess Corporation, a 30% stakeholder in Guyana’s Stabroek Block, is optimistic that the Government of Guyana will approve the Hammerhead development—the seventh oil project—by April 2025. However, ExxonMobil Guyana Limited (EMGL), the operator of the block, is yet to submit a complete Field Development Plan (FDP) for the project.

Speaking at the Goldman Sachs Research “Energy, CleanTech & Utilities Conference” on Tuesday, Hess Corporation CEO John Hess said, “We have a Field Development Plan that we’re looking for the government to sanction let’s say by April of this year.”

Hammerhead is expected to produce approximately 150 thousand barrels per day (kbd) a smaller capacity compared to the 250 kbd expected from the fifth and sixth projects, Uaru and Whiptail developments, set to come onstream in 2026 and 2027 respectively. Despite this, Hess highlighted the project’s robust economics.  Hammerhead was announced as Exxon’s ninth commercial discovery in August 2018. Exxon is aiming to commence production activities by 2029, following the requisite approvals.

“That’s one tank of oil, it’s a little heavier, but it’s still got very attractive economics, one even of itself and two because of the production sharing contract that we have. So we’re gonna have very high returns even though it’s a smaller ship,” he said.

The Production Sharing Agreement (PSA) governing the Stabroek Block that Hess referred to is one that has been criticised for being lopsided, favoring the Stabroek Block partners more than the country.  The deal waives all taxes from the oil companies and caters for it to be paid by the government, gives Guyana a 2% royalty on its rich resources, and agrees to the oil companies recovering 75% of investments before the remaining 25% is shared, with Guyana receiving 12.5%.

Moreover, Hess addressed concerns about whether Hammerhead’s smaller output signals declining opportunities in Guyana’s oil sector. “Now people are saying, ‘Well that’s your 7th ship and it’s not 250, it’s 150, so therefore the future opportunities you have in Guyana are not as attractive.’ Not true. It’s a tank of oil we wanna produce. We don’t leave the oil behind,” he said.

He underscored outlined plans for the Longtail project, the eight development which he said is expected to be sanctioned in 2026. Longtail will feature a 240,000-bpd Floating Production Storage and Offloading (FPSO), focusing on gas liquids and lighter crude.

Hess stated, “Clearly, the pathway to 2030 should have 8 FPSOs producing in the range of 1.7 million barrels per day, and there’s more to come after that there’s some deeper horizons, there is also some inboard horizons, younger rock as well, then there is some exploration that we’re doing in Guyana.”

Additionally, ExxonMobil Guyana President Alistair Routledge during an episode of ‘Energy Perspectives’ that was posted on Sunday said, “In 2024, we commenced the environmental permit for Hammerhead and we anticipate in 2025 that we will submit the field development plan working closely with the EPA and the government on the approval process.”

Last October, the Ministry of Natural Resources issued Expression of Interests (EOI) seeking a consultant to review Exxon’s FDP for the Hammerhead Development. However, a few weeks later, Guyana’s Chief Policymaker on oil and gas, Vice President Bharrat Jagdeo had disclosed that he had informed the Ministry to discontinue the search for the consultant. He said he made this decision because the information the company presented thus far is incomplete.

“…So, there will be no consultant hired to review the project until we have the entire submission… until we have a full submission from Exxon, we are not gonna start the review process and I expect them to make a full submission sometime next year,” the VP had said.

Moreover, this publication had reported that while the government halted its part due to the incomplete submission, the Environmental Protection Agency (EPA) advanced its part in relation to the application that was made by ExxonMobil for Environmental Authorisation for the Hammerhead project.

On November 6, EPA published the Terms and Scope to guide the preparation of the Environmental Impact Assessment (EIA) for the Hammerhead Development. The EPA said it conducted a review of the application and determined that the project may significantly affect the environment and will require an EIA. “This Terms and Scope guides the preparation of the EIA. While Section 11 of the Act specifies “EIA”, this Terms and Scope seeks to include social and economic components in keeping with the Guyana Environmental Protection Act…” EPA said.

(Hess hopes govt. will approve 7th oil project by April )

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• crude, Hammerhead, John Hess, Stabroek Block

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