Page 5 - LatAmOil Week 36

LatAmOil COMMENTARY LatAmOil

New potential Nevertheless, Georgetown had to wait longer
Mike Cousins, ExxonMobil’s senior vice-pres- than anticipated for the third payment, since
ident of exploration and new ventures, also the equipment problems at Liza-1 delayed the
expressed satisfaction with recent developments. loading of the most recent cargo.
“Our Stabroek block exploration programme
continues to identify high-quality reservoirs in Political challenges
close proximity to previous discoveries, estab- Meanwhile, there are further challenges ahead,
lishing efficient opportunities for new projects some of them political in nature.
in Guyana. Developing these projects remains Guyana has only recently resolved the par-
an integral part of ExxonMobil and our co-ven- tisan quarrelling that led David Granger, the
turers’ long-term growth plans and a source of country’s last president, to challenge the results
significant value for Guyana,” he was quoted as of the March 2 elections. Granger spent more
saying in his company’s statement. than five months disputing the vote counts
Meanwhile, one of ExxonMobil’s non-op- (and recounts) that put him behind challenger
erating partners, the US independent known Irfaan Ali but finally agreed late last month to
as Hess, pointed out that Yellowtail and Red- step down.
This move finally cleared the path for Ali to
tail are close to many of the other fields found a positive move, as the electoral impasse had “
in the south-eastern part of the Stabroek block. assume the presidency in late August. This was Reports of
In a separate press release, Hess’ CEO John
Hess noted that nine of the 18 oil discoveries lay been preventing Georgetown from authorising ExxonMobil’s 18th
within this small area. ExxonMobil and other investors to proceed with discovery at the
“The Redtail-1 and Yellowtail-2 discoveries new work programmes. But it also trained the
further demonstrate the significant exploration spotlight on the ethnic component underlying Stabroek block
potential of the Stabroek Block and will add to the political strife.
the recoverable resource estimate of more than Briefly, Granger has been serving as head of come at a time of
8bn barrels of oil equivalent [boe],” he said. the Partnership for National Unity and Alliance
“Redtail is the ninth discovery in the southeast for Change (ANPU-AFC). This faction leans to some uncertainty
area of the block, which we expect will underpin the right and favours market-oriented policies, for Guyana’s
future development.” and most of its supporters are of African descent.
ExxonMobil is the operator of Stabroek and Ali, meanwhile, heads the People’s Progressive emerging oil
holds a 45% stake in the project. The remain- Party/Civic (PPP/C) faction, which leans to the
ing equity is split between Hess, with 30%, and left – and which has mostly attracted votes from industry
China National Offshore Oil Corp. (CNOOC), people of South Asian descent.
with 25%. The new president, in line with his political
affiliation, has talked about revising some of
Technical and economic challenges Guyana’s exploration and production contracts
The US super-major has not yet said when it in order to ensure that the government maxim-
might begin developing its new finds at Redtail ises its share of future revenues. He has indicated
and Yellowtail. So far, the company and its part- that these revisions would not affect Stabroek,
ners have only managed to bring one section of the first field offered to investors. But he has also
Stabroek on stream – Liza-1, which reached the made it clear that the other contracts are likely
milestone of first oil late last year. to be tweaked.
And even this part of the project has not been As such, ExxonMobil’s news of its 18th dis-
quite as successful as ExxonMobil had hoped. covery at Stabroek comes at a time of some
The Liza Destiny, the floating production, stor- uncertainty for Guyana’s emerging oil industry.
age and off-loading (FPSO) vessel installed This uncertainty is likely to ensure that plans for
at Liza-1, has missed its deadline for bringing developing the new finds at Yellowtail and Red-
crude output up to the projected peak level of tail will not emerge for years to come. ™
120,000 barrels per day (bpd).
The delay stems largely from technical prob-
lems – namely, malfunctions in the compressors
used to re-inject associated gas back into the res-
ervoir. But it is also related to the onslaught of
difficulties faced by oil producers everywhere
this year, owing to the demand-destroying
nature of the coronavirus (COVID-19) pan-
demic and the aftershocks of the Saudi-Russian
price war, which saw some grades of crude drop
briefly below zero in late April.
These setbacks have already had an impact
on Guyana’s economy. They have made oil
exports less lucrative than originally antici-
pated, as evidenced in the fact that the second
cargo of exports consisting of the government’s
share of production brought in $35mn, com-
pared with $55mn for the first cargo. The third
cargo had better results, as it generated $46mn. The Liza Destiny FPSO is developing Liza-1 (Photo: ShipSpotting.com)

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