Page 5 - LatAmOil Week 12 2023

LatAmOil COMMENTARY LatAmOil

For example, it could conceivably lead to a situa- observers have suggested that gas from Guyana
tion in which the winners of the auctions for the could be sent to an LNG plant (perhaps via pipe-
two shallow-water sites designated as S2 and S3 line to neighbouring Suriname) to support an
find oil in the eastern ends of their blocks – and export-oriented project.
must then negotiate unitisation with Tullow Oil Georgetown has indicated, though, that
(UK/Ireland), the operator of the neighbouring oil production and exports are its priority. In
Orinduik block. (This is a plausible scenario, as the model contracts, it said that the primary
Tullow and its partners have made two sub-com- option for associated gas ought to be utilisation Guyana has
mercial discoveries in the Joe and Jethro sections for purposes related to enhancing oil produc-
of Orinduik, and both of these fields are near the tion. It explained that such purposes included made clear
edges of the block.) gas re-injection, gas lifting and electric power that it intends
generation and stated that investors would be
Oil the first priority required to submit plans for full utilisation to to make oil
Meanwhile, Guyana’s government has also made the government.
clear with the release of the new contracts that In the event that there are surplus volumes and not gas
it intends to make oil and not gas the primary of gas, it added, investors have several options.
focus of development activity in its offshore They must agree to transfer their gas to the Min- the primary
zone, at least for the time being. istry of Natural Resources for disposal as the focus of
There is certainly room to raise questions state determines appropriate, surrender their
about what Guyana is to do with its gas reserves. find to the government or draw up proposals development,
Stabroek alone appears to hold at least 17 trillion outlining their ability to make gas sales a viable
cubic feet (481bn cubic metres) of associated and commercial proposition (on terms comparable at least for the
natural gas, and ExxonMobil has already made to those of oil sales).
arrangements with the Guyanese government to These are probably long-term considera- time being
use some of these volumes. Specifically, it will tions, though, as Guyana’s most urgent priorities
pump associated gas from the Liza-1, Liza-2 and will be to wrap up the bidding round, negotiate
Payara development sites to shore for the $1.2bn and sign contracts and then clear the way for
Gas-to-Energy (GTE) project. more exploration.
Meanwhile, Canada’s CGX Energy has hinted Those hurdles really will have to be cleared
strongly that there is more gas in the northern first for the question of what happens with
section of its Corentyne block, which lies adja- respect to unitisation and gas utilisation to be
cent to the gassy sections of Stabroek, and some more than theoretical.. ™

NGC, PdVSA and Shell struck an initial deal for Dragon in 2018 (Image: PdVSA)

The current bidding round includes 14 offshore blocks (Image: petroleum.gov.gy)

Week 12 22•March•2023 www. NEWSBASE .com P5