As oil production begins, Granger expects increased jobs, promises wise spending of oil money

Last Updated on Saturday, 21 December 2019, 1:21 by Writer

President David Granger

President David Granger Friday night said he expected increased jobs and assured that oil revenues would be spent wisely, shortly after ExxonMobil announced that it earlier in the day began commercial oil production from the Liza field offshore Guyana.

“The petroleum sector will stimulate increased employment and expand services,” he said in an address to the nation.

He announced that he intended to proclaim December 20 as National Petroleum Day as a reminder of the duty to protect Guyana’s patrimony and to ensure the sustainable management of finite hydrocarbon resources. Some estimates put the life of the country’s oil and gas sector at between 20 and 40 years based on current discoveries, as oil companies continue to search for more oil in commercial quantities in the Guyana-Suriname basin.

While oil production began Friday, the first million barrels — ExxonMobil’s first entitlement — are not expected to be shipped to one of its refineries until January 2020. Guyana’s first three million barrels are also expected to be shipped off to an international oil refinery of its choice. ExxonMobil and Guyana’s entitlements are to be refined to remove all contaminants and set a standard that will attract the best Brent crude price.

The President restated that his administration planned to spend the oil revenues on developing the social sectors and physical infrastructure. With the sovereign wealth fund legislation in place and an account already opened at the Federal Reserve Bank of New York for deposits to be made, Granger said withdrawals from the fund “will follow a balanced approach, prioritising investment in public education, public health, public infrastructure, public security, social protection and other social services and will support private sector development.”

“Petroleum production will be a transformative process in the country’s economic development,” he also said.

“It is also imperative that as Guyanese we begin to appreciate that the direct and indirect benefits from this sector will go far beyond anything that we have seen to date. The Department of Energy, therefore, will continue to utilise prudence and best practices to ensure that we extract the best value for our people. This for us is a dream realised” Head of the Ministry of the Presidency’s Department of Energy, Dr Mark Bynoe said.

The opposition People’s Progressive Party (PPP), has criticised the sovereign wealth fund legislation, and the Private Sector Commission has so far not nominated representatives to sit on a committee. Finance Minister, Winston Jordan has said until such nominees are named, the monies would be deposited into the fund and some spent after the March 2, 2020 general and regional administrative council elections.

The Ministry of the Presidency’s Department of Energy, according to government, has been established to manage the country’s hydrocarbon resources and build the institutional, legislative and regulatory capacity to manage this sector effectively. “This historic development for the Co-operative Republic of Guyana (CRG) is a culmination of substantial investments, perseverance, dedication, ingenuity, and the establishment of the appropriate policy environment that has the capacity to propel our nation towards sustained development.

“Guyana’s future is bright, but we can only secure that future by strengthening legislation, conducting due diligence, emphasizing education, following a balanced development paradigm and utilising the best skills in the industry through partnerships,” Dr Bynoe said Friday night.

Except for the sovereign/natural resource fund legislation, the petroleum commission bill has not been passed and government says it is still working on a local content policy and has hired experts to remodel the production sharing agreement which has come in for sharp criticism from those who believe that its provisions generously favour the oil companies.

Commercial oil production from the Liza 1 field is pegged at 120,000 barrels per day.

The Liza Phase I 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 2 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.

The current discovered recoverable resource for the Stabroek Block is more than 6 billion oil equivalent barrels. It is anticipated that by 2025 there would be at least five FPSOs producing more than 750,000 barrels of oil daily from the Stabroek Block.

Esso Exploration and Production Guyana Limited is operator and holds 45 per cent interest. Hess Guyana Exploration Limited holds 30 per cent interest and CNOOC Petroleum Guyana Limited holds 25 per cent interest.