– says Finance Minister
By Navendra Seoraj
TRANSFORMATION of Guyana’s economy beckons with the potential wealth which the new petroleum state will start to earn from next year, wealth which Minister of Finance, Winston Jordan, said will benefit from “the cradle to the elderly.”
American oil giant, ExxonMobil had made its first lift of crude offshore Guyana at the Liza-One well, on Friday, officially making Guyana an oil-producing nation. The country is now a petroleum state due to the efforts of ExxonMobil, which will go down in history as the first company to pump oil for commercial purposes here.
Following up on its announcement of “First Oil” on Friday, ExxonMobil announced its 15th oil discovery, on Monday. The discovery was made at the Mako-One well which is southeast of the Liza field in the Stabroek Block.
Director of the Department of Energy, Dr. Mark Bynoe, said the discovery adds to the previously-announced estimated recoverable resource of more than six billion oil-equivalent barrels on the Stabroek Block.
The Mako-One well encountered approximately 164 feet (50 meters) of a high-quality oil-bearing sandstone reservoir. The Well which was drilled in 5,315 feet (1,620 meters) of water, is located approximately six miles (10 kilometers) southeast of the Liza field, which began commercial production of oil on Friday, December 20, 2019.
“All these finds and the potential wealth from the new industry offers hope… this petroleum, with its possibilities of billions of USD coming to Guyana, will turn around this country once and for all…from the cradle to the elderly must benefit from this potential wealth,” said Minister Jordan during his remarks at a community outreach exercise in Non Pariel, on Monday.
The minister said oil is being pumped and soon “big tankers” will arrive in Guyana’s waters to export the crude. With the exportation of crude set to begin in 2020, Jordan said Guyanese can expect an eventful year, which will bring riches and spoils, all of which will be handled efficiently.
Minister Jordan made a promise that the sector and revenue from the sector will be effectively and efficiently managed in order to transform an economy (Guyana) which had, for too long, depended on one or two resources for sustainability.
Over the past years, Guyana has boasted resources like bauxite and manganese which were both being managed by foreign companies, said the minister, who added that despite having all those resources, there was very little to show for it.
“More recently we had gold and so on, yet we have very little to show for it…we learnt a lesson that we had a lot but we eat out everything and didn’t save for a rainy day,” said Minister Jordan, noting that even the rice and sugar industries had brought in decent revenue, which was not saved by the former People’s Progressive Party (PPP) administration.
The current A Partnership for National Unity and Alliance For Change (APNU+AFC) administration learnt a lesson from those failures, said the minister, noting that in an effort to save money, President David Granger authorised the creation of the Sovereign Wealth Fund (Natural Resource Fund).
The fund, which was established under the Natural Resource Fund (NRF) Act, was created to manage the natural resource wealth of Guyana for the present and future benefit of the people and for the sustainable development of the country, and for connected matters.
With a proper system for the management of oil revenues in place, Minister Jordan believes that government will be able to ensure that the benefits are equitably distributed. One of the immediate goals of the government is to ensure that some of the revenue is used to connect the coast and hinterland.
The vision as outlined by the minister is to: “create a Guyana that is interconnected where the coast and the hinterland are no longer strangers.”
Minister Jordan said the country will be connected by bridges, rails, roads, boats and other infrastructure. He believes that once there is greater connection, government will be better able to distribute the benefits of the oil and gas sector.
As a reminder of Guyana’s new dawn and potential prosperity, President Granger declared December 20 as ‘National Petroleum Day.’ The President said: “the proclamation will remind Guyanese of our duty to protect the country’s patrimony and to ensure the sustainable management of finite hydrocarbon resources.”
Guyana will lift its first cargo of petroleum produced at the Liza Destiny during February or March. This follows a handful of lifts by the Contractor Group, which includes ExxonMobil, Hess and CNOOC.
The order follows international conventions for a “fair” lifting order that goes by whoever has the next largest entitlement percentage at that time.
The government will have the largest outstanding entitlement to lift by February – though of course royalties will be paid on all of the earlier cargoes.
During all of these lifts and for all future lifts, the oil-lifting process will be monitored by both independent third-party auditors and two additional government representatives.
Last weekend, Director of the Department of Energy, Dr. Mark Bynoe , said that the first three cargo lifts of Guyana’s crude following ‘first oil’ will be up for direct sale to international traders who were expected in the country this week.
Through his department, Dr. Bynoe clarified misguided reports, by confirming that the country’s decisions are being guided by a full team of international experts, internal experts and the Guyana Public Procurement Commission (PPC).
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 oil-rich Stabroek Block, while the involved partners continue to see “multibillion barrels of additional exploration potential.”
ExxonMobil and its partners have racked up 14 commercial oil discoveries in the Stabroek Block, the last being the Tripletail-One exploration well located approximately three miles northeast of the Longtail discovery. The Tripletail discovery adds to the six billion barrels of oil equivalent.
The Liza Phase One project will produce up to 120,000 barrels of oil per day at peak rates utilising 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 Liza Phase One development project features the Liza Destiny floating, production, storage and offloading (FPSO) vessel moored 190 kilometres offshore Guyana, and four subsea drill centres supporting 17 wells.
The Liza Unity, a second FPSO with a capacity to produce up to 220,000 barrels of oil per day, is being constructed to support the Liza Phase II development. Front-end engineering design is underway for a potential third FPSO, the Prosperity, which is geared at developing the Payara field upon government and regulatory approvals.
