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Saipem gets green light to commence US$500M work for Exxon’s Hammerhead project
Kaieteur News – Italian multinational oilfield services company Saipem has received authorisation to proceed with work for ExxonMobil Guyana Limited’s (EMGL) seventh development offshore Guyana, the Hammerhead project.
The authorisation follows Monday’s approval by the Government of Guyana (GoG) of a Petroleum Production Licence (PPL) for Exxon’s US$6.8 billion Hammerhead project in the prolific Stabroek Block.
In April, Saipem announced that it had received Limited Notice To Proceed (LNTP) agreement for Engineering, Procurement, Construction, And Installation (EPCI) works for the Hammerhead project. While the project was not approved at that time, the LNTP allowed Saipem to commence activities like detailed engineering and the procurement of long-lead equipment.
In a release on Friday, Saipem said following the receipt of the necessary government and regulatory approvals, as well as the final investment decision by Exxon, it has now received authorisation to continue the execution of the contractual activities with the offshore campaign currently planned to begin during 2028.
According to Saipem, the contract is valued at US$500 million. Saipem’s scope of work includes the engineering, procurement, construction and installation of Subsea, Umbilical, Riser and Flowline (SURF) structures for the production facility and the gas export system related to the Hammerhead project.
The company noted that it will carry out the operations using a variety of construction and support equipment, including the Saipem FDS2 and the Shen Da, which is part of the company’s fleet as a chartered vessel.
The logistics will be entirely executed and managed in Guyana through the Vreed-en-Hoop Shorebase Inc. (VEHSI) yard. Saipem noted that VEHSI will generate employment and other opportunities for Guyanese.
Moreover, Saipem reiterated its commitment to Guyana and strengthening its presence and relationship here. The company was already awarded six additional contracts for projects in the same region: Liza Phase 1 and Phase 2, Payara, Yellowtail, UARU and Whiptail by ExxonMobil Guyana.
The Hammerhead development is located in the south-western portion of the Stabroek Block offshore Guyana and targets the Hammerhead reservoir. Hammerhead was announced as Exxon’s ninth commercial discovery in August 2018. The Hammerhead-1 well was drilled in a new reservoir, encountering approximately 197 feet (60 metres) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 feet (4,225 metres) depth in 3,773 feet (1,150 metres) of water.
First oil from the Hammerhead project is expected by 2029. The project will use a Very Large Crude Carrier (VLCC) conversion-type Floating Production, Storage, and Offloading (FPSO), which will be built by Japanese shipbuilder, MODEC. Some 445 million barrels of oil is expected to be produced with an estimated daily production capacity of 150,000 barrels of oil per day (bpd). Hammerhead oil production will be facilitated through 10 production wells and eight injection wells.
Hammerhead is expected to boost Guyana’s overall production capacity at approximately 1.5 million bpd, with the FDP projecting this by the second quarter of 2029.
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