Page 5 - LatAmOil Week 31

LatAmOil COMMENTARY LatAmOil

ExxonMobil has already managed to start pro- Nevertheless, it does appear to be making
duction at the first stage of Liza, one of the fields progress at Stabroek. Hess, a non-operating
within the block, and has finalised plans for partner in the project, recently reported that two
bringing Liza’s second stage online. But it has new high-quality oil reservoirs had been identi-
not made as much progress on Payara, the next fied within a well drilled at the Yellowtail section
Stabroek field slated for development. of the block. It also said another exploration well
The US company had said previously that had been spudded at the nearby Redtail section.
it hoped to secure approval for its Payara pro-
gramme in 2019 and then begin producing oil in Tullow slows down
2023. But it had already failed to meet the former Other investors, by contrast, have slowed their
deadline by the time Guyana held elections in activity. Tullow Oil (UK/Ireland) said in March
March. As a result, it had no hope of reaching the that it had decided not to drill any more wells in
stage of first oil on time. Guyana, where it operates the Orinduik block
Nevertheless, it has persisted in attempt- and supports Repsol (Spain) at the Kanuku
ing to secure the necessary approvals and per- block, in 2020. It made this announcement after
mits for work at Payara. Certainly, it had little determining that its Jethro-1 and Joe-1 wells “
hope of doing so as long as Guyana’s election at Orinduik contained heavy crude oil with The resolution
results remained contested. Now that Granger a high sulphur content – and that Carapa-1, a
has given way to Ali, though, it may be able to well drilled at Kanuku, had tapped into a poorly of the election
achieve its new goal of securing a green light for developed reservoir. dispute should
the programme before the end of 2020. Tullow has written off all three wells, but it
The Norwegian energy consultancy Rystad has not given up on Orinduik or Kanuku yet. It clear the way
had struck a more pessimistic note last month, has said, though, that it wants to make a further
calling the first half of 2021 a more realistic study of the blocks before drawing up any new for ExxonMobil’s
target for approval and predicting that Payara drilling plans. As a result, ExxonMobil is likely
would not begin commercial production until to remain the most active operator in Guyana’s other efforts in
2024. It may change its tune now that political offshore zone for the rest of this year. Guyana
transition is underway at last, after five months
of arguing over election results. Changing political directions
Meanwhile, there is more to think about than
ExxonMobil makes big plans exploration.
The resolution of the election impasse should Granger’s departure in favour of Ali could
also clear the way for ExxonMobil’s other efforts lead the government of Guyana to take a slightly
offshore Guyana. different approach to the oil sector. Members
The US giant had indicated previously that it of the new president’s PPP/C party have com-
had big plans for the South American state’s off- plained that the terms of the contracts awarded
shore zone. Shortly before starting production by the previous administration are too favoura-
at Liza last December, the company said it had ble to foreign investors. They have said they will
applied to Guyana’s Environmental Protection not seek to change the terms of ExxonMobil’s
Agency (EPA) for permission to drill a total of 31 Stabroek agreement, but they are also looking to
new exploration wells – 25 within the Stabroek renegotiate the more recently signed deals.
block, three within the Kaieteur block and three As such, other companies may not be so
within the Canje block. lucky. They may have to pay higher royalties
It remains to be seen how quickly ExxonMo- or turn over a higher share of their produc-
bil executes this drilling programme. The com- tion to the Guyanese government. As such, if
pany appears to approaching Canje and Kaieteur the new administration presses investors too
cautiously. It did indicate in May that it hoped hard, companies such as Tullow may start ask-
to spud a wildcat well, Tanager-1, at Kaieteur in ing themselves whether Orinduik, Kanuku and
the third quarter, but it has not revealed many other licence areas with less-than-stellar drilling
details about drilling plans for Canje. results are worth the risk.. ™

Week 31 06•August•2020 www. NEWSBASE .com P5