– with production pegged at 700,000+bpd by 2023
ENERGY consultants, Rystad Energy, has projected very favourable outcomes for Guyana from ExxonMobil’s explorations here.
According to the group, this country could become a major destination for the provision of oilfield services, with Exxon possibly pumping out as much as 700,000 barrels per day.
This is the view of Sonya Boodoo, Senior Analyst with Norway-based Rystad Energy, who gave a presentation on Tuesday evening at a symposium at Duke Lodge, Kingston, under the auspices of the Private Sector Commission.
She noted that the exploration success rates in Guyana are way above average, based on ExxonMobil’s successes since its first discovery in 2015.
“We at Rystad Energy do see a positive outlook for Guyana’s exploration and production activities, with peak production exceeding 700,000 barrels [per day] by 2030,” said Boodoo, who has an MSc in Energy Studies.
But she clarified that this production figure is based on the assumption that all of the eight discoveries by ExxonMobil are put into production.
“Significant wealth is expected to be generated from the E&P (exploration and production) activities in Guyana, and the government is expected to receive up to U.S.$100B at a US$70 per barrel oil price now, if all of these discoveries are sanctioned,” Boodhoo said, adding:
“Rystad Enery expects Liza Phase 2 to be approved next year and potentially have a start-up in 2023.
“And with all these discoveries, we see that Guyana has the potential to be a major upstream destination for oilfield services. “We expect Guyana to rank among the 13 largest nations for oilfield services by the 2020s.”
She noted that capital and operational expenses will reach about US$15B were all of the discovered wells sanctioned for production, and if that is the case, some three Floating, Production, Storage and Offloading vessels (FPSO) would be needed.
A FAIR DEAL
Boodoo, whose forte is Oil & Gas Economics, said that Guyana secured a fair agreement with U.S. oil giant ExxonMobil and its joint-venture partners HESS and CNOOC Nexen, because of the country being a frontier region.
“What we have done,” she said, “is compare the Guyana Government’s take with other offshore regions. And we find the government take here as the net present value of the government receipts divided by the net present value of the profits of the entire field; and what we have seen is that average for offshore is around 80 per cent, and Guyana comes in at around 59 per cent.”
Boodoo noted that while in the grand scheme of things, Guyana might appear to be receiving a low number, one must remember that Guyana is a frontier region. She said that when compared with other offshore regions that are in a similar state of maturity, Guyana’s ranking is about average, comparable to countries such as Mauritania, Mozambique and Israel.
“Within this frontier region bucket,” she said, “we see the average government take being between 45 and 70 per cent; and Guyana falling at 59 per cent is quite average in that respect.
“So we think the regime here is quite fair and average.”
She spoke of the necessity for countries such as Guyana to incentivise investment into the oil-and-gas sector here.
“We need to incentivise people to come and invest in a Region that is quite high risk. One way to do that is by government offering very favourable fiscal terms. And I think that it has been successful in attracting ExxonMobil and its partners into the Region. and discovering all of these resources,” she said.
Boodoo warned that changes to existing contracts could serve to disincentivise activities, which, she said, could lead major players with significant capital to invest to disregard that particular country and possibly delay potential future developments, because of changes in existing contracts and “them not having confidence that government would keep to their word.”
