First oil for December
Finance Minister, Winston Jordan
Finance Minister, Winston Jordan

…Min Jordan says revenues will be parked until after elections
…says government had ramped up preparations in anticipation of early start

First oil in Guyana can begin as soon as December, ahead of the previous March 2020 timeline and Finance Minister, Winston Jordan has stated that efforts will be made to speed up local preparations for the shipment of crude.

The announcement of this earlier timeline was made on Wednesday by HESS Corporation, a partner of ExxonMobil which holds a 30 per cent interest in the Stabroek Block. In a report on Wednesday of the Company’s Third Quarter of 2019, HESS Chief Executive Officer (CEO), John Hess said: “In September, we announced our 14th discovery in the Stabroek Block at Tripletail, offshore Guyana and are now targeting December for first oil from the Liza-1 development.”

Meanwhile, Minister Jordan told this newspaper that the revenues to come from this production will be stored in an account and parked until after March 2,2020 when a new government is elected. Back in July 2019, Director of the Department of Energy, Dr. Mark Bynoe, had informed the public that the country will be selling its own share of exported crude from oil production at Liza Phase 1.

The Liza Destiny FPSO

Crude is natural mineral oil not yet processed or refined, which is stored aboard a Floating Production, Storage And Offloading (FPSO) vessel and then transferred to tankers and pipelines heading ashore. Dr. Bynoe had also stated that the Department is aware of the risk associated with not getting this right which is why industry-standard documents based on the Association of International Petroleum Negotiators Crude Liftment Agreement is being applied.

“All sales of crude oil from the FPSO where Guyana’s interests are concerned or Guyana’s entitlement will be via Free On Board. This means that the crude is sold to the buyer at the exit point of the FPSO and the buyer is responsible for shipping said crude. The crude will be sold in million-barrel cargoes…and there will be crude cargo liftings every eight to 10 days; thus, it requires an efficient and smoothly run process. I am happy to report that the department has been working with its sister agencies and the operator to ensure that such a process is put in place so we can ensure that it is running as efficiently as possible from day one,” Dr. Bynoe said.

Minister Jordan relayed that, unlike members of the public, the government had fore knowledge that oil production in Guyana could very well begin ahead of first quarter 2020 and made its plans with this in mind. “We had an inkling that the first oil could be in December and therefore we were working under that assumption and trying to ramp up our activities. So, it doesn’t come as a surprise to us who were working underground,” he said.

“I can’t say that we have every duck lined up but I think knowing that we knew that first oil could be earlier than first quarter, we were trying to work with the World Bank and other donors who were helping us to try to put in place as much as possible the critical elements,” the Finance Minister said.
While he stated that the government is excited about first oil, he reminded that monies from this production are not going to be flowing in Guyana in 2019 but not until certain processes are out the way.

He noted that Exxon Mobil, HESS and its third partner CNOOC Petroleum Guyana Limited, will first have to be paid their share before revenues come to the government. “Even though we’re supposed to get ‘x’ per cent of this shipment, we have to have a whole shipment. It has to accumulate to a whole shipment [prior to accumulation of revenue]…for that to happen our shipment might be maybe January or February so that monies can come in to the account; the first shipment that will belong to us,” he explained.

Meanwhile, the Liza Destiny, Guyana’s first FPSO set to operate at Liza Phase 1 Development had arrived in the Stabroek Block some three weeks ahead of schedule. The vessel is twice the length of the Providence Stadium; half the width of the Georgetown Cricket Ground; has the depth of the Kingston Lighthouse and the capacity to store some 1.6 million barrels of oil.
Apart from HESS, Esso Exploration and Production Guyana Limited (EEPGL) holds 45 per cent interest and CNOOC Petroleum Guyana Limited, a 25 per cent interest in the Stabroek Block.

It is estimated that there is over six billion barrels of oil equivalent in the Block while the involved partners continue to see “multibillion barrels of additional exploration potential”. HESS noted that Exxon’s and its partners’ 14th discovery was announced on the Stabroek Block at the Tripletail-1 exploration well located approximately 3 miles northeast of the Longtail discovery. The Tripletail discovery adds to the 6 billion barrels of oil equivalent. The Liza Phase 1 project will produce up to 120,000 barrels of oil per day at peak rates utilizing the Liza Destiny FPSO.

It is expected to generate over $7B in royalty and profit oil revenues for Guyana over the life of the project. The Noble Bob Douglas drillship is currently completing development drilling operations for the Liza Phase 1 development.
At the same time, the Stena Carron drillship is completing a well test at the Longtail-1 discovery and, upon completion will next drill the Hammerhead-3 well. The drillship is also expected to drill a second well at the Ranger discovery this year. The Noble Don Taylor drillship has been contracted by Esso Exploration for exploration in the Stabroek Block “early October 2019 to early October 2020.”

SHARE THIS ARTICLE :
Facebook
Twitter
WhatsApp

Leave a Comment

Your email address will not be published. Required fields are marked *

All our printed editions are available online
emblem3
Subscribe to the Guyana Chronicle.
Sign up to receive news and updates.
We respect your privacy.