ExxonMobil’s Payara development plan comes under scrutiny

Last Updated on Monday, 4 May 2020, 17:51 by Denis Chabrol

ExxonMobil’s planned development of the Payara reservoir offshore Guyana is coming under intense scrutiny before government gives the green light for the consortium’s operational plan when the country’s two-month long election controversy is resolved, officials said on Monday.

Director of the Ministry of the Presidency’s Department of Environment, Dr. Mark Bynoe told a virtual news conference that several issues have to be resolved with the co-venture under the umbrella of Esso Exploration and Production Guyana Limited (EEPGL).

“The review of the Payara FDP (Field Development Plan) is fairly advanced with some preliminary issues raised with the Operator. The DE continues to engage with the Operator in a collaborative manner before finalization of the comments to be shared with the Operator,” Bynoe said.

While Bynoe declined to provide details, industry sources familiar with the offshore oil projects said the United Kingdom-headquartered oil and gas consultancy, Bayphase, has been raising several questions about the proposed operations such as costs for each activity, number of wells to be drilled,  drilling schedule, the amount of water and gas needed for reinjection, rates of oil production and the types of equipment.ExxonMobil, the sources said, have been responding to comments and questions about the technical plans for Payara development.

The Head of the Department of Energy made it clear that he would not allow President David Granger, who is the Minister of Petroleum, to approve the start-up of the Payara project development.  “I think that it is well known that assessing and approving of field development plans do require the signature of the minister. I could not expose my minister at this time to a process that is incomplete,” said Bynoe, a Natural Resource Economist.

Bynoe said the political situation in Guyana over the results of the March 2, 2020 polls was just one of the issues yet to be addressed by EEPGL before the Guyana government could grant approval for the Payara development. “In large measure, we have provided them a list of matters that have to be addressed before we can consider further the issue of the payara potential or possible approval. So that is not just a case of politics; there is some improvements to be made to the FID report that was presented for review,” he said.

After the FDP is approved by the Department of Energy, Guyana’s Environmental Protection Agency (EPA) has to also give its stamp of approval before ExxonMobil/ EEPGL makes its Final Investment Decision (FID).

ExxonMobil  recently corroborated independent projections by Rystad, a Norway-based energy consultancy, that Guyana’s oil production target of 750,000 by 2025 would face a setback. A Rystad analyst had said this was due to the coronavirus, declining global demand and the political situation which would affect government decision-making.

From the Liza Phase One operations alone where commercial oil production began last year December, Guyana has earned US$55 million from its first lift of oil sale of one million barrels by Shell Western Supply and Trading.  3rd week of May, 2020. Government says Guyana also earned an additional US$4.9 million in quarterly royalty payments.

Both amounts have been deposited into Guyana’s Natural Resource Fund whose account is at Federal Reserve Bank in New York.