Page 5 - LatAmOil Week 28 2020

LatAmOil COMMENTARY LatAmOil
It was also able to bring production back up to 80,000 bpd.
Despite these signs of progress, the incident has forced ExxonMobil and its partners to make some changes to their work schedule. e US company had been aiming to bring the Liza eld up to its full rst-phase production capac- ity of 120,000 bpd by late June, but it has already missed this target.
Meanwhile, Guyana’s government had been hoping to amass enough oil from its share of production to load a third cargo for delivery to world crude markets in July. It is now likely to have to wait until later in the summer, owing to the temporary output cuts.
New prospects
The news is not all bad. In fact, ExxonMobil appears to be gearing up for another round of exploration work at Stabroek.
The Guyanese press reported earlier this week that the rm was moving a drillship known as the Noble Don Taylor from the Liza eld to Redtail, another section of the block. e vessel is heading to the site of the planned Redtail-1 well and is due to wrap up activity there in early September, according to local reports.
Investors are optimistic about Redtail’s prospects. ExxonMobil has already discovered hydrocarbons at 16 separate elds within the block, which is now believed to hold about 8bn barrels of oil equivalent (boe) in recoverable reserves, and has expressed con dence about the rest of its licence area.
More missed deadlines
Even so, political concerns have intruded upon the company’s plans.
As the Norwegian energy consultancy Rys- tad Energy noted earlier this week, the next Guy- anese eld that is slated to begin production is Payara-Pacora, another section of the Stabroek block. ExxonMobil had hoped previously to secure approval for this part of the project in 2019 and achieve rst oil in 2023. But a er fail- ing to meet the former deadline, it is in no posi- tion to meet the latter.
Certainly, the company has persisted in attempting to obtain the necessary approvals and permits to make plans for work at Payara- Pacora. Even so, it has not yet succeeded – and has little hope of doing so as long as Guyana’s election results remain a point of contention. It has indicated that it hopes to secure a green light before the end of 2020, but Rystad said that the rst half of 2021 was a more realistic target. It also predicted that Payara-Pacora would not begin commercial production until 2024.
Politics and geopolitics
As noted above, the delays stem from disputes over the results of Guyana’s most recent election. On March 2, the country’s citizens went to the polls for the presidential election, and the best evidence indicates that a majority voted for the candidate of the main opposition party (Irfaan Ali of the le -leaning People’s Progressive Party/
Civic) over the incumbent (David Granger of the right-leaning APNU-Alliance for Change party). Nevertheless, Granger’s administration has challenged these results, calling for multiple recounts of the votes and preventing the Guyana Elections Commission (GECOM) from certify- ing the outcome. Additionally, it has denied alle- gations of interference in the electoral process.
ExxonMobil and other IOCs might prefer to see Granger remain in o ce, as his APNU-AfC party is willing to o er foreign investors more generous terms than Ali’s PPP/C. Nevertheless, the recounts conducted by GECOM, monitored by the 15-member Caribbean Community (CARICOM) and endorsed by other groups such as the Organisation of American States (OAS), show Ali to be the winner.
e matter is now the subject of a legal dis- pute and is due to be settled in court. Pending such a settlement, however, Guyana will remain in political limbo. This political limbo has already led to problems in the area of policy – for example, the inability to take decisions such as granting approval for ExxonMobil’s next moves at the Stabroek block.
But it is also causing the country di culty in the geopolitical realm. e US government has signalled its dissatisfaction, with Secretary of State Mike Pompeo announcing that Wash- ington was penalising the Guyanese officials involved in blocking the transfer of power.
“Today, I am announcing visa restrictions on individuals who have been responsible for, or complicit in, undermining democracy in Guy- ana. Immediate family members of such persons may also be subject to these restrictions,” Pom- peo told reporters on July 16.
e US is not the only country to condemn the current government’s actions. CARICOM, OAS, the Caribbean Court of Justice (CCJ), the Commonwealth of Nations, the UK and Brazil have also called on Granger’s administration to abide by the results of the March 2 election.
Ripple effect
In return, o cials in Georgetown have called on the president’s critics to leave the matter to GECOM and to await the outcome of the court case in Guyana. ey have not said how long these bodies might take to arrive at a decision, but Rystad has pointed out that further delays will have consequences.
Speci cally, it has stated that the longer the South American state waits to approve further development, the less oil it will be able to pro- duce – and the less oil revenue it will be able to earn. Additionally, commented Palzor Shenga, a senior upstream research analyst for the con- sultancy, problems at Stabroek might discourage other potential investors.
“Approval delays for Payara-Pacora could have a domino e ect on numerous other pro- jects in the Stabroek Block. is would, in turn, have a substantial impact on the investments made in Guyana, thereby also dragging down job creation and GDP generation in the coun- try,”hesaid.™
“ government
is penalising the Guyanese officials involved in blocking the transfer of power
The US
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