…royalty set at 2%, 100,000 barrels per day envisaged

THE Government of Guyana is expected to grant a production licence to Esso Exploration and Production (Guyana) Ltd and partners Hess and Nexen.
In a statement, the Ministry of Natural Resources said following reviews of the technical and environmental aspects of the Liza Project-Development Plan that was submitted by Esso Exploration and Production (Guyana) Ltd (EEPGL) in December 2017, the government is expected to grant a production licence to ExxonMobil for production of petroleum to move ahead in 2020. The statement said the licence will place emphasis on Guyanese employment and training, the procurement of goods and services in Guyana, infrastructural soundness and protection of the environment.

According to the government, the production licence is required to be finalised before the developers make their Final Investment Decision (FID) for the project in June 2017.
“Extraction from the Liza field is expected to commence in 2020 at an initial rate of 100,000 barrels of crude per day in the first phase, with a Floating Production Storage and Offloading (FPSO) vessel providing the main infrastructural support for the project,” the ministry’s release stated.
It added: “The Government and people of the Cooperative Republic of Guyana will receive a royalty of 2 percent on gross earnings and benefit from 50 percent of the profits from the sale of petroleum once production commences.”

The Ministry of Natural Resources and other ministries and agencies are actively pursuing a number of undertakings on the policy, legislative and infrastructural sides to ensure that the country is prepared for the coming oil production. “As this ministry, along with others, seeks to develop our oil and gas industry in a sustainable and profitable manner, citizens are encouraged to continue to provide their feedback and recommendations on the new sector when the ministry’s outreaches visit their communities. Following consideration by the Cabine, the findings of the various reports will be released,” the statement concluded.
In late March, ExxonMobil had announced a major discovery of oil here at its Snoek well offshore Guyana, confirming some 82 feet of high-quality, oil-bearing sandstone reservoirs.

ExxonMobil in a statement had said drilling targeted similar, aged reservoirs as encountered in previous discoveries at Liza and Payara. “The latest discovery at Snoek demonstrates the continued success we have achieved in this technically complex play, which is just part of the significant exploration province offshore Guyana,” said Steve Greenlee, president of ExxonMobil Exploration Company, in a statement.
According to the statement, ExxonMobil affiliate Esso Exploration and Production Guyana Ltd commenced drilling of the Snoek well on February 22, 2017 and encountered 82 feet (25 metres) of high-quality, oil-bearing sandstone reservoirs. The well was safely drilled to 16,978 feet (5,175 metres) in 5,128 feet (1,563 metres) of water on March 18. The Snoek well is located in the southern portion of the Stabroek Block, approximately five miles (9 km) to the south-east of the 2015 Liza-1 discovery.

Following completion of the Snoek well, the Stena Carron drillship has moved back to the Liza area to drill the Liza-4 well. “As we continue to evaluate the full potential of the broader Stabroek Block, we are also taking the necessary steps to ensure the safe, cost-efficient and responsible development of this world-class resource, which can provide long-term, sustainable benefits to the people of Guyana,” said Greenlee. The Stabroek Block is 6.6 million acres (26,800 square kilometres). Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

President David Granger during a meeting with ExxonMobil’s executives had assured them of Government’s commitment to the development of Guyana’s oil and gas sector in an atmosphere of transparency and trust, so that the parliamentary Opposition and the people of Guyana are fully involved in the process and views the development of a petroleum industry as one of natural interest and involvement.

The President said that it is important that there are regular and accurate announcements on matters pertaining to the development of the sector. “We are committed to the norm of transparency…so that we can move forward at a domestic level, not only in an atmosphere of transparency, but trust, so that all Guyana would see this not as a short-term bonanza; so that Guyanese will see this as a national industry….In this regard, we are walking step by step as the developments take place offshore and the developments in terms of our legislations within our regulatory framework in terms of the passage of information to various stakeholders in Guyana and the diaspora,so that we can create an environment which is stable and secure,” the President said.