Page 5 - LatAmOil Week 30 2021

LatAmOil COMMENTARY LatAmOil

Hess, a US-based independent company that is benefit from that? That is where the local content
a non-operating partner in the Stabroek block element comes in,” he remarked.
was similarly optimistic about the new discover- Indar also urged privately owned Guyanese
ies. In a separate press release, it quoted its CEO providers of goods and services to bid for con-
John Hess as saying: “Whiptail is a significant tracts related to work at Stabroek, saying that the
new discovery that will add to the discovered project had created many opportunities. “What
recoverable resource estimate of approximately you have to understand is, that means that is a lot
9bn barrels of oil equivalent [boe] and could of money,” he said.
underpin a future oil development in the south-
east area of the Stabroek block.” Environmental stewardship
Neither company is yet in a position to say Bharrat spoke at the forum shortly after he
when (or even whether) Whiptail might be praised ExxonMobil for its ongoing efforts to cut
slated for development, as they have to finish gas flaring at Liza-1. In a recent interview with
drilling the wells first. In the meantime, both OilNOW.gy, the minister acknowledged that the
ExxonMobil and Hess stressed in their press US super-major was trying to serve as a good
releases that work on the second, third and environmental steward and was making “genu-
fourth development projects was proceeding as ine efforts” to address the equipment problems
planned. Liza-2 is on track to come on stream that have complicated its efforts to minimise
in early 2022, with Payara following suit in 2024 flaring.
and Yellowtail in 2025, they said. He was referring to problems with the flash
ExxonMobil also said that it still hoped to gas compressor (FGC) system on the Liza
have six development projects online by 2027. Destiny, the floating production, storage and
It did not say whether it was ready to name its off-loading (FPSO) vessel that has been installed
fifth and sixth development targets, but Greg at the Liza-1 field. These problems have limited
Hill, the COO of Hess, said last week that the the company’s ability to re-inject associated gas
partners were looking closely at Longtail and back into the reservoir, putting it in a position of
Uaru-Mako. He described the first field as “a having to decide whether it will halt or reduce oil
very large reservoir system” and said that the production in order to curtail flaring.
Uaru and Mako fields were part of a complex “When production has to be lowered, when
that was a “very good, very oily area.” (Hill also these technical issues arise, it affects both par-
said at the time that he was very optimistic about ties’ profitability,” Bharrat noted. “But we got
Whiptail.) the commitment from them that they want this
matter resolved. Neither side wants flaring to be
PSA complaints above pilot levels.”
On a less upbeat note, Guyana’s Natural He also praised Alistair Routledge, the pres-
Resources Minister Vickram Bharrat said dur- ident of ExxonMobil Guyana, for his efforts to
ing a forum at the office of the Guyana Oil and keep the government apprised of the matter.
Gas Energy Chamber in Georgetown that he Routledge has been communicating frequently
still had reservations about ExxonMobil’s PSA with President Ali, Vice-President Bharrat
for Stabroek. Jagdeo and the Natural Resources Ministry and Whiptail is
Echoing statements made by President Irfaan has also assured the government that experts very close to
Ali and other members of the current admin- will be travelling to Germany soon to study the
istration, he complained that the agreement, data collected during repair of the faulty com- several other big
which was finalised during former President pressor on the FGC system, he noted.
David Granger’s time in office, was too favour- “I am convinced that they [ExxonMobil] are discoveries at
able to ExxonMobil and not favourable enough trying their utmost to be good environmental
to the government. The terms of the deal do not stewards,” he said. Stabroek
allow Guyana’s government to reap maximum Additionally, he reminded OilNOW.gy that
value from the development of Stabroek, he said. Georgetown had revised ExxonMobil’s develop-
Bharrat stressed, though, that Guyana could ment permit for Liza-1 in light of the additional
increase its take by maximising the use of local gas flaring at the field. The revisions impose a
content in the project. “As a government, we financial penalty for flaring and require the
are open to partnership with any individual company to make payments to the Guyanese
organisation or agency that shares the view that Environmental Protection Agency (EPA) at the
Guyanese must benefit from the sector,” he com- rate of $30 per tonne of carbon dioxide equiv-
mented. “And how do we benefit as Guyanese alent. These penalties have already generated
from the sector? Of course, through a strong more than $1mn in revenue for the government,
local content policy. Of course, we have a PSA he noted.
that is not bringing the kind of benefits that we But the minister also stressed that George-
would have liked as a nation.” town did not view this arrangement as a source
Minister of Public Works Deodat Indar of income.
spoke similarly, noting that ExxonMobil and its “[Even] as we are earning something for the
partners would be channelling a certain amount flaring being done now, it is not something this
of money into Guyana’s private sector.“With government encourages,” he remarked. “In fact,
the current construct of the ExxonMobil con- we don’t want to continue this for as long as
tract, 75% of the money spent in any calendar possible. And let me make it clear: This is not a
year, there is a cap on it for cost oil. How do you licence to pollute but to deter.” ™

Week 30 29•July•2021 www. NEWSBASE .com P5