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Exxon awards contracts to build 8th oil ship without Govt. approval
(Kaieteur News) – ExxonMobil Guyana Limited (EMGL) has moved to award several contracts, releasing payments to Dutch shipbuilder, SBM Offshore for an eight Floating Production, Storage and Offloading vessel (FPSO) to produce hydrocarbons at a project yet to be approved by the Government of Guyana (GoG).
SBM has received contracts to perform Front End Engineering and Design (FEED) studies for the FPSO that will produce hydrocarbons at the Longtail project.
In a statement on Tuesday, SBM explained, “The FEED contracts award triggers the initial release of funds by ExxonMobil Guyana Limited to begin FEED activities and allocate a Fast4Ward hull for the Longtail development project in Guyana.”
EMGL President, Alistair Routledge
The company said further construction and installation activities for the FPSO will be conducted after government signals its approval for Exxon’s development plan and the final investment decision by the company. In the meantime, SBM said, “Under the contracts, the FPSO’s ownership is expected to be transferred to the client at the end of the construction period and before start of operations in Guyana.”
Further, the construction costs are expected to be partially funded by senior loans which will be repaid at the time of the FPSO’s transfer to ExxonMobil. SBM Offshore is expected to operate the FPSO through its integrated operations and maintenance model combining SBM Offshore and ExxonMobil’s expertise and experience, leveraging key learnings and the operational excellence of the units currently deployed in Guyana.
The eight FPSO will be designed and constructed by SBM using industry-leading Fast4Ward program with the Company’s ninth new build, Multi-Purpose Floater hull, combined with several standardised topsides modules. The FPSO will be designed to process 1,200 million cubic feet of gas per day and produce 250,000 barrels of condensate per day. The FPSO will be spread moored in water depth of about 1,750 meters and will be able to store around 2 million barrels of condensate.
To date, SBM has been awarded contracts for six FPSOs by Exxon. The Liza Destiny, Liza Unity, Prosperity, One Guyana, Jaguar and now the FPSO for Longtail which has not been named yet were all awarded to the company.
It said, “We are proud to receive this sixth FPSO award from ExxonMobil Guyana. This project underscores the strength of our Fast4Ward approach and extensive experience in large-scale gas-processing systems. SBM Offshore is well positioned to support the Longtail development, a major gas play demanding the highest gas handling capacity ever deployed on an FPSO. Our teams remain fully committed to supporting the success of this project and ExxonMobil’s long-term energy development strategy.”
The award of contracts to SBM will drive up the cost bank which Exxon said Guyana will pay off by the end of this year given the high prices of oil. Last week, the President of EMGL, Alistair Routledge said, “We were anticipating sometime next year in 2027 that we were going to get to the point where we had recovered those historic cost…what we are now seeing in this price environment is that will accelerate.” So far, ExxonMobil has expended U.S.$40B to develop the seven oil projects approved to date. Currently, U.S.$5B remains in the cost bank to be recovered by the company.
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