(CMC, 12.Nov.2018) — Finance Minister Winston Jordan has given an insight into the campaign for the 2020 general elections in Guyana telling voters that the oil sector will feature prominently in the race for the leadership of the Caribbean Community (CARICOM) country.
Addressing a political meeting ahead of Monday’s Local Government Elections (LGE) on Sunday, Jordan said that Guyana’s new found oil and gas industry would most likely be pivotal to the success of political parties contesting the general and presidential election in two years’ time.
“The next election is the mother of all elections ever in this country. You know why? Because the oil would be coming on stream and they all want their hands on the oil. We have to keep those thieves away from the oil resources,” he said at the meeting held at the Stabroek Market Square in the capital.
Jordan warned supporters of the People’s National Congress Reform (PNCR) -dominated A Partnership for National unity (APNU) that would be robbed of the oil wealth if they “allow that other government” to return to office, a clear reference to the main opposition People’s Progressive Party Civic (PPP/C) that was sept out of office in 2015.
“If they get their hands on those oil resources, cat will eat your dinner,” Jordan said, urging the supporters to think about the political implications of the massive oil revenues expected after the country begins commercial production of oil and gas.
Jordan said even without the oil “they (former government ministers) built big mansions on our forefathers lands, on the sweat and blood of our forefathers and they did not even access to the oil resources”.
While no one has yet been charged in connection with the allegations, the Special Organised Crime Unit (SOCU) of the Guyana Police Force (GPF) has been questioning several people, including former president Bharrat Jagdeo in the ongoing two-year probe.
Jordan noted that the integrity of President David Granger as an “honest, God-fearing person who has the interest of this country at heart and with him leading us again in 2020, you can be assured that the oil resources will be invested in your interest.
“I am passionate that this government must be given at least another term to put in place the policies that we are now setting. I am passionate that the coalition is the only government who can manage those massive oil resources that are coming,” he said.
Guyana is early 2020 expected to begin oil production at 120,000 barrels per day which would earn US$300 million in that year. Oil production is estimated to be about 750,000 barrels per day by 2025 and earning from profit oil and royalty could be more than one billion US dollars annually.
Guyanese are voting Monday in the Local Government Elections that the PPPC said should be viewed as a referendum on the performance of the APNU coalition.
(Guyana Department of Public Information, 12.Nov.2018) — Prime Minister Hon. Moses V. Nagamootoo held discussions with a high-level, five-member team from the World Bank, which is visiting Guyana at the invitation of Finance Minister Winston Jordan.
The hour-long meeting, at which Finance Minister Winston Jordan was present, took place on Friday, November 9 at the Prime Minister’s Office.
Led by Mexican-born Mr. Jorge Familiar, Regional Vice-President for Latin America and the Caribbean region, the World Bank assured support to Guyana in capacity building as the country prepares for first oil.
The visit is part of an on-going engagement with Guyana, simultaneously in several sectors.
Others on the team include regional director, Mrs. Tahseen Sayed; country manager for Guyana and Jamaica, Mrs. Galina Sotirova; regional programme leader, Mrs Abha Prasad; and operations officer, Mr. Federico Baechili.
Mr. Familiar shared the recent dismal experiences of a few regional states that depended on oil wealth, and stressed that Guyana would need solid governance systems to avoid pitfalls, and to protect and beneficially spend anticipated revenues.
In welcoming the team to Guyana, Prime Minister Nagamootoo emphasised the efforts of the Coalition Government in promoting open, democratic, multi-party governance in Guyana, and the mechanisms in place to combat sleaze by public officials and accountability for public property.
He explained the many innovations in the democratic architecture of Guyana over the past three years, and invited the World Bank to partner with the Government to strengthen these institutions and to build human capital to manage the new economy.
The Guyanese Prime Minister, who was performing the functions of the President, referred to the Green Paper for a Natural Resources Fund, which was tabled in the National Assembly; and the crafting of a Green State Development Strategy, to provide a generational vision for the future oil-producing Guyana. He noted that the Fund policy is underlined by stringent fiscal rules to guide the use of petroleum resources.
Mrs. Tahseen Sayed, remarked that towards this end, the World Bank has approved a US$35 million development policy credit to better prepare the country to benefit from its oil and gas reserves, and to support Guyana’s effort to strengthen financial sector development and fiscal management.
The World Bank team is expected to meet other key government officials and other stakeholders.
(Oilprice.com, Viktor Katona, 12.Nov.2018) — I know what you think – such a headline is quite reckless given that Guyana has not produced any oil so far and it is not until 2020 that we can actually start talking about a Guyanese oil miracle. Still, Guyana is one of the hottest exploration regions globally, in just three years ExxonMobil has managed to realize nine impressive finds, totaling around 4 billion barrels in reserve. And this is just the beginning – further exploration will inevitably elevate Guyana into the ranks of South American leaders. Now where does this leave Senegal and the Gambia? Well, if one is to accept my somewhat precipitated assumption, many similarities are to be discovered between Senegal and Guyana, pointing to the direction of big discoveries coming very soon.
The Senegal Basin and the Guyanese Basin are by-products of the same tectonic developments in what used to be West-Gondwana, where intra-continental rifts developed in Cretaceous sedimentary basins. As a result, both sides of the Atlantic Margin are structurally and compositionally similar. Yet Guyana has always ranked somewhat higher than the Senegal Basin – the vicinity of oil-prolific Venezuela has always jangled the nerves of ambitious oilmen, whilst Senegal was largely overlooked. To illustrate the point – when the USGS conducted an assessment of the Senegal Basin reserves in 2003, the discovered oil reserves at that point stood at a mere 10MM barrels of oil, whilst gas resources amounted to 49BCf. That, of course, has changed after the largest oil and gas find of 2017, which, having been under the radar of leading news outlets, was the Yakaar field in offshore Senegal.
The deepwater Yakaar field was discovered last May, confirming Kosmos Energy’s expectations that it would contain 15 TCf of reserves. Yakaar, together with the development of the Greater Tortue Complex offshore Mauretania with some parts crossing into Senegalese waters, provide a solid foundation for creating two relatively low-cost LNG clusters in the area. The results attained heretofore several important questions – what do relevant countries (Mauretania, Senegal, Gambia, Guinea Bissau and Guinea) expect from their hydrocarbon endowment? Would they prefer gas reserves instead of oil? Any answer would most likely be vacillatory because the Senegal Basin has so far mostly unfolded gas fields, with only partial success in drilling for oil. The truth is that all Senegal Basin nations would love to set their sights on oil (easier to monetize and use), Senegal is a fitting example of how it could use it.
Senegal’s oil product consumption grows by an annualized rate of roughly 4%, making the task of upgrading the energy sector increasingly time-sensitive. For this, it would need not only oil, but also downstream infrastructure, which currently is sparse and unsophisticated. However, the only refinery in the country, the 25 kbpd Mbao refinery built in 1963, will not be able to cater for Senegal’s needs – in a highly dieselized country, it is expected that product demand would more than double in the next 20 years from the current 47kbpd to 115kbpd. It would also place Senegal in a more comfortable position as the government could renounce on buying Bonny Light and Erha from Nigeria, albeit at discounted prices, and could fully rely on its own production.
Amid several large gas finds, so far there has been only one noteworthy oil discovery – the first deepwater well in Senegalese waters in 2014 found the SNE field in Albian sandstones at a depth of 1.4km. The SNE field contains, according to the operator Cairn Energy, 3C reserves of 998MMbbl which could allow it to reach a plateau production late 2020s of 140kbpd – the start of the field is expected to take place in 2022-2023. Oil from SNE would be fed into a FPSO with subsea tie-backs. Some 20km to the north of SNE, another discovery, FAN, is showing some potential, too, with estimated reserves ranging from 250-900MMbbl. The hydrocarbon column which the drillers found was more than 500 meters long, with the net oil column being 29 meters.
The Gambia tries to keep abreast with regional developments, having drilled the first offshore well, Samo-1, in late October after almost 40 years of idleness. The Samo-1 well is located in Gambia’s Block 2, to the south of Senegal’s SNE fields – meaning that most likely it shares its geological structure, meaning Maastrichtian sandstones that most likely contain light oil with a 32-33° API density. A positive result (the operator FAR expects that it will find around 825MMbbl of) would extend the oil-bearing play across the Senegalese-Gambian border and hype up the resource potential of the Senegal Basin. Yet as opposed to Senegal, which has fought long-standing battles with its own populace and interest groups on how to deal with its hydrocarbon resources, the Gambia fully lacks the institutional framework to manage its oil and gas.
Now back to the Senegal-Guyana comparison. One of the most interesting trends across the Atlantic is that companies which have serious positions in either Guyana or Senegal are currently trying to establish themselves on the other side of the Atlantic. ExxonMobil, which has by far played the most important part in developing offshore Guyana, clinched 3 deepwater blocks in offshore Mauretania (i.e. the part of the Senegal Basin which is most likely to contain oil) and seeks to use its profound Guyana-relevant knowledge to appraise the stratigraphic traps along the African shore. It works the other way round, too – Total, the most powerful major present in Senegal, built on the intense Franco-Senegalese ties, has entered Guyana this year, acquiring interests in the Canje, Kanuku and Orinduik Blocks.
Thus, do not be surprised if in five years’ time Senegal or Mauretania becomes one of the hottest locations for oil majors – after several decades of torpor, partially thanks to the efforts of some risk-taking independent companies, the Senegal Basin has emerged as a genuinely attractive play with some top-quality fields (e.g.: the SNE field’s breakeven oil price hovers around 40 USD per barrel). The plays are similar to Guyana’s – something which majors familiar with the structure of the Atlantic Margin have already noticed, with Total and ExxonMobil placing their bets on both sides of the ocean. Senegal’s similarities with Guyana, however, do not end with the characteristics of the fields and plays in question. Institutionally, it might still not be ready for the administration of the burgeoning oil sector.
Senegal’s national oil company Petrosen has issued a call for expressions of interest on deepwater offshore blocks to the south of Gambia’s A4 and A5 blocks, which it deems might contain up to 1.5 billion barrels of oil equivalent. It counts on the participation of oil majors – Total is sure to play a very active role in any licensing round that takes place, as well as Petronas (the operator of Gambia’s Samo-1 well). Yet for this, Senegal first ought to clarify how would the new petroleum code look like – will PSAs be a preferred variant or will it apply concessionary agreements, too; will it introduce a petroleum export tax and if so, to what extent would it do harm; how strict would local content requirements be? It is only after all these questions are clarified that international majors will rush to the new hydrocarbon-rich region.
(Houston Chronicle, James Osborne, 2.Nov.2018) — Almost 4,000 feet beneath the surface of the Atlantic Ocean, off the northern coastline of South America, Exxon Mobil is drilling one of the biggest oil discoveries of the last decade, the so-called Stabroek Block with an estimated 4 billion barrels of crude.
It stands to buoy the oil giant’s fortunes at a time the company’s oil and gas production is flagging. But the discovery has come at a price.
The massive find, located in the waters of the tiny country of Guyana, has reignited a century old territory dispute with its powerful and volatile neighbor Venezuela, flaming geopolitical tension in a region where the United States, China and Russia are increasingly competing for influence.
With Venezuela claiming a portion of Exxon’s field, Guyana has taken the case to the International Court of Justice, the United Nation’s court system in the Netherlands, as U.S. diplomatic and military officials in Washington watch adversaries in Beijing and Moscow warily.
“When we look at the controversy around the territory claims [by Venezuela] it gets pretty complicated pretty quickly,” said Ret. Vice Admiral Kevin Green, who oversaw U.S. naval operations in the Caribbean, Central and South America. “The United States is engaged globally in what is becoming more and more a great power competition. Both Russia and China see opportunities for themselves in that region, to quite frankly frustrate the United States.”
Trouble began even before Exxon, which declined to comment, realized how much oil was in Guyana.
In 2013, the Venezuelan Navy seized a ship contracted by The Woodlands exploration and production company Anadarko to survey the ocean’s bottom for oil. While the boat was in waters recognized internationally as Guyana’s, Venezuela claimed crew members had violated its territory and held them and the ship for a week before releasing them as part of a diplomatic deal.
Then Exxon announced in 2015 it had successfully drilled a test well in Stabroek. Within weeks, Guyana was tossed out of Petrocaribe, the Venezuelan food for oil program, in which countries across Central and South America and the Caribbean provide Venezuela’s 32 million inhabitants with food in exchange for subsidized crude.
Then Venezuela issued a statement asserting its ownership of two-thirds of Guyana’s land and waters claimed not only by Guyana, but also Trinidad and Tobago and Barbados.
The claim dates back to the late 1800s when Venezuela and Great Britain, which then controlled Guyana, could not agree on the border between their countries. An international tribunal intervened, and the dispute fell dormant until 1949 when a memo, written by one of attorneys that represented Venezuela in the tribunal, surfaced with the claim that judges had colluded with Britain.
Ever since, the border has been a rallying cry in Venezuelan politics. Guyana’s Ambassador to the United States Riyad Insanally said for years Venezuela had pressured oil companies not to explore in Guyana, using the threat of cutting companies off from Venezuelan oil fields – among the world’s largest.
But relations between Caracas and the international oil companies began to break down during the rule of the late Hugo Chavez, who nationalized a number of oil fields, including some held by Exxon.
“It was a bit like a Robert Ludlum novel,” Insanally said of the attorney’s memo. “No one likes being bullied and we feel we’ve been bullied for far too long. But we don’t have any military might, and we don’t have any economic clout. All we can is do is rely on the resourcefulness of our people and international diplomacy.”
The Venezuelan embassy in Washington did not return a call for comment.
The presence of Russia and China in a region long dominated by the United States has escalated what might have been a disagreement among neighbors. The U.S. rivals have again and again provided financial lifelines to Venezuela, devastated by an economic crisis, in exchange for increasing claims on their energy supplies. And they are increasingly investing in Guyana.
China recently loaned Guyana $130 million to expand its airport to allow 747s to land. Earlier this year, the nation of less than 1 million people signed onto China’s Belt and Road pact, through which the Asian superpower is investing in developing countries around the globe.
Rusal, the Russian aluminum giant owned by the oligarch Oleg Deripaska, a close associate of President Vladimir Putin, has operated bauxite mines in Guyana for more than a decade.
“Nobody wants to see Russian warships sailing around the Caribbean, and they do that occasionally,” said Thomas A. Shannon, Jr., an attorney and former under secretary of state for political affairs. “The region has largely been ours since we chased out the Germans and the French. We don’t need the presence of adversities or potential adversaries. But the way we do this it by taking care of our friends.”
The hope among U.S. officials is that the discovery of oil in Guyana’s waters will not only bring prosperity to a long impoverished nation, but also bring it deeper into the American fold.
So far, that seems to be proving out. U.S., British and Norwegian officials already are advising Guyana on how to manage its newfound wealth when oil is scheduled to start flowing in 2020. The aim is to avoid the so-called resource curse through which corruption and mismanagement become endemic upon the discovery of oil.
“The U.S. is still our major trading partner. Our links with the U.S. are much stronger than Russia and China. But we enjoy good relations with all three because that is the reality of being a small country,” Insanally said.
The presence of iconic American company like Exxon Mobil is only expected to increase Guyana’s bond with the United States. And so far, the oil giant has shown no signs of wavering in its commitment to drilling there, despite rising tensions around its operations.
It’s a calculated risk. Exxon’s oil and gas production has fallen for eight of the last nine quarters. Were Guyana to develop as Exxon has forecast, the additional production could potentially raise the oil giant’s global production by close to 8 percent, said Pavel Molchanov, an energy analyst at Raymond James.
“Exxon’s legacy production has been so weak in recent years, the company can use all the help it can get,” he said. “Guyana is in some ways the exception that proves the rule. It’s one of the few exploration success stories of this entire decade.”
But developing all of Exxon’s prospects in Guyana will not be quick. And that leaves plenty of time for what is now a legal argument expected to be decided by the courts to potentially escalate into a military conflict.
Brazilian President Michel Temer has already pledged to send in troops should Venezuela invade the disputed area inside Guyana.
“There’s some reports and analysis suggesting Venezuela will start some kind of military action against Guyana,” said Lisa Viscidi, an energy analyst at the Washington think tank Inter-American Dialogue. “It’s still really unlikely they would do that.”
(DemeraraWaves, 31.Oct.2018) — Finance Minister, Winston Jordan on Wednesday hinted that government workers would receive salary increases when in 2020 when Guyana begins producing oil estimated to rake in about US$300 million in that year.
“I foresee improvements in the social and economic status of Guyana. I foresee progressive improvements in the human, cultural and every other developmental aspect of the country,” he told a news conference.
Asked specifically whether the planned improvements to the social, human and economic development of Guyanese would include increased wages and salaries. “…including everything but we have to take everything in context. We don’t want a situation where I give you two dollars and you lose three so one of the big things that has to happen is that production has to be pulled up, we have to diversify,” he said.
He explained that all of the US$300 million (GYD$60 billion) from Liza Phase One production of 120,000 barrels per day would be deposited into the Sovereign Wealth Fund and some withdrawn for economic development in keeping with the fiscal rules that would govern the fund.
That would be 50 percent of profit oil plus two percent royalty, but the actual earnings could be more if the world price moves up to about US$70 per barrel.
Cash set aside from economic development, he said would be withdrawn and deposited into the Consolidated Fund after converting American dollars into Guyanese dollars through the Bank of Guyana. “At no point will 300 million be available to the government for spending and the way how the 300 million become offline and it will go offline so it doesn’t create disturbances to the economy; so much money flooding the economy, few goods are around, large imports it suddenly attracts,” he said.
The Finance Minister cautioned against pumping too much money into an economy when production is low which could result in depreciation of the Guyana dollar and inflation.
(Hart Energy, Velda Addison, Senior Editor, 31.Oct.2018) — Partners Exxon Mobil, Hess Corp. and CNOOC Nexen Petroleum are making progress toward development of the hydrocarbon bounty discovered offshore Guyana.
“This month a second exploration vessel, the Noble Tom Madden, arrived to accelerate exploration and appraisal activities on the block starting with the Pluma prospect located 17 miles south of Turbot where we expect to spud in early November,” Hess Corp. CEO John Hess said on the company’s third-quarter earnings call Oct. 31.
The well will target Upper Cretaceous reservoirs, the company said.
So far, the Exxon Mobil-led exploration effort has led to nine discoveries. The latest was announced in August after Exxon Mobil affiliate Esso Exploration and Production Guyana Ltd.’s Hammerhead-1 struck oil, opening a new play type and adding to the prospectivity of the Stabroek Block.
The discoveries, which are expected to lead to a gross production of more than 750,000 barrels of oil per day by 2025, have been among the exploration bright spots for the industry which saw oil and gas companies’ exploration budgets drastically slashed during the market downturn. The success offshore Guyana has also spurred interest from other companies looking to hit oil in the region.
Greg Hill, COO for Hess, said a successful flow test was recently completed at Hammerhead and additional appraisal activities are planned. Plans are for the Stena Carron rig that drilled the well to go to the Canary Islands in Spain for recertification before returning to the block in late December to spud a well on the Upper Cretaceous Amara prospect, which is about 24 miles southeast of the Turbot discovery.
Meanwhile, development of Liza Phase 1—sanctioned in June 2017—is moving ahead. First oil is expected by early 2020 with a nameplate capacity of 120,000 bbl/d of oil, Hill said.
The larger Phase 2 development, with a capacity of 220,000 bbl/d, is also on track for startup by mid-2022, he said, adding “Phase 3 is currently in FEED with first oil expected in 2023.”
Hess called the company’s position offshore Guyana “truly world class in every respect and transformational for our company.” Discovered recoverable resources for the Stabroek Block, in which Hess has a 30% stake, are estimated at more than 4 billion barrels of oil equivalent.
Guyana is one of Hess’ two main growth engines. The other is the Bakken where net production grew to 118,000 boe/d during the third quarter, up from 103,000 boe/d a year earlier.
“We forecast Bakken net production will increase to approximately 125,000 net barrels of oil equivalent per day and we expect to drill approximately 35 wells and bring 31 wells online bringing the total for full year 2018 to 120 wells drilled and 100 new wells brought online,” Hill said.
Hess also continues to test limited entry plug-and-perf completions and higher proppant loadings.
“Initial results are encouraging,” Hess said. The company added a sixth rig in the Bakken in September, and expects to generate annual capital production growth of between 15% to 20% through 2021, he said.
For the quarter, the New York-headquartered company reported net income rose to $52 million, compared with a net loss of $624 million a year earlier. The company also grew oil and gas production to a net average 279,000 boe/d, excluding Libya. The amount exceeded guidance and came as E&P capital and exploratory expenditures fell slightly to $542 million, down from $558 million a year earlier.
“We delivered another strong quarter of execution. With higher production and guidance and lower unit costs and guidance while keeping capital on exploratory expenditures flat with guidance for the year and generating a profit for the quarter,” Hess said. “We continue to execute our strategy to deliver capital efficient growth in our resources and production investing in the highest return projects to move down the cost curve and be profitable in a lower price environment with increasing cash generation and returns to shareholders.”
(DemeraraWaves, 31.Oct.2018) — Police in Grenada have confirmed that a Guyanese man died aboard the MV Ocean Trader – a Guyanese registered ship- that was docked in Grenada last weekend.
Dead is 41-year old Permanand “Short Man” Permaul.
The vessel departed that Caribbean island Tuesday evening following the completion of an investigation by Grenadian law enforcement agents
An official from the Grenada Port Authority explained that whenever there is a fatality onboard any ship in its waters, the nation where the ship is registered must be notified. “We have already done this and cannot share further details about the cause of the fatality,” said the official who is in a management position.
Guyana’s Maritime Administration (MARAD) has confirmed that the vessel is indeed registered there and was informed about the fatality. The official said the owner of the vessel, Mr. F. Amin, would be contacted and he is expected to take full responsibility for the body.
The boat, which was docked at the St George’s Cargo Port, was visited by officers from the Criminal Investigations Department and applied the required protocol following the report. “On arrival, they observed the motionless body of Permanand Permaul alias “Short Man”, 41-year-old citizen of Guyana lying on his back on the deck,” said an official report to authorities.
“The officers met and spoke with Yuvraj Persaud, 36 yrs. old Captain Master a citizen of Guyana who stated that on October 27th about 22:30 hrs, he was inside his cabin sleeping when one of the workers informed him that Permanand who was cleaning inside one of the tanks got knock out. As a result, he made checks and saw him lying on the floor,” the report said.
The report said that the captain sought assistance and gave the deceased Cardio-Pulmonary Resuscitation (CPR) but that did not revive him. A doctor was then called to the scene and declared Permaul dead.
An undertaker took possession of body which is expected to be flown out of Grenada to Guyana on Thursday. Police have not shared the autopsy results with the media.
(Energy Analytics Institute, Jared Yamin, 27.Oct.2018) — China’s CNOOC Limited announced that success in Guyana has laid the foundation for future development.
“Successful drilling of Longtail Structure and Hammerhead Structure at the Stabroek block in Guyana further enhanced the asset value and laid a high-quality resource foundation for future development,” the company reported in its operational statistics report for the third quarter of 2018.
(Demerara Waves, Denis Chabro, 26.Oct.2018) — Two days after Minister of State, Joseph Harmon rebuffed a Demerara Waves Online News report on responsibilities for Guyana’s oil and gas, the Official Gazette has been changed to now show clearly that only the President and no minister is in charge of that sector.
In an October 19. 2018 notice of the Official Gazette, Harmon is no longer responsible for matters and groups of matters related to Oil and Gas, and the Ministry of the Presidency’s Department of Energy.
The gazette says the oil and gas sector is now “unassigned to any minister”.
“This publication highlights the change made to the assignment of responsibilities within the Department of Energy, Ministry of the Presidency showing the reversion of the assignmemt of responsibility for the matters and groups of matters relating to Petroleum (Oil and Gas) and the Department of Energy, to the President,” states the amendment to notice signed by Harmon. That notice was published in the October 27, 2018 edition of the Official Gazette.
With this latest development, it is now unclear whether Minister Harmon will still be responsible for reporting on the sector to the National Assembly or public stakeholder engagements. The President had informed oil companies that the Minister of State in the Ministry of the Presidency is responsible only for such matters as I delegate to him with respect to reports to the National Assembly and public sector and stakeholder engagements.”
Minister of Business, Dominic Gaskin has been seen publicly representing the Guyana government in oil and gas matters.
President David Granger in early October 2018 had written to several oil companies informing them that he (Granger) was now responsible for the sector in keeping with the Petroleum Act.
“I am directly and solely responsible for approving exploration and production licences, work plans and local content plans; decommissioning and monitoring and adjudicating, where appropriate, compliance with the laws and regulations, inter alia, of the Cooperative Republic of Guyana,” Granger said in a letter seen by Demerara Waves Online News.
In August, when oil and gas sectoral responsibilities had been officially shifted from Minister of Natural Resources, Raphael Trotman to the Department of Energy, Harmon had been listed as the gazetted minister.
(ProactiveInvestor, 26.Oct.2018) — Eco (Atlantic) Oil & Gas Ltd has started to look for a new partner for the Cooper Block in Namibia after Tullow Oil pulled out.
Tullow will now transfer its 25% working interest in Cooper to Eco, which own 57.5% stake as a result.
“With more than three and a half years still to drill on the Cooper Block under the terms of the licence, and with a drill ready target (The Osprey Prospect), the company has already started discussions with potential farm-in partners to replace Tullow and to jointly drill the Osprey Prospect,” said its statement.
Eco’s other major partner in the Cooper Block, Azinam (32.5%) has said already it wants to continue exploration, including the drilling of an exploration well.
Tullow, meanwhile, has decided to focus on Orinduik, offshore Guyana, where it is the operator with a 60% stake.
Eco also has a 15% stake in Orinduik, where discussions are underway with both Tullow and Total over speeding up the development plan, which in cludes the possibility of an additional well in 2019.
(Oilprice.com, Tsvetana Paraskova, 23.Oct.2018) — With population of fewer than 750,000 people, Guyana—a neighbor of Venezuela—has always depended on commodities. Sugar, gold, shrimp, timber, bauxite, and rice account for nearly 60 percent of this South American country’s gross domestic product (GDP). Now, Guyana is set to add another valuable commodity to that list.
In 2015, ExxonMobil—whose market capitalization is roughly 100 times Guyana’s GDP—made its first oil discovery offshore Guyana, adding another very precious commodity to the tiny nation’s potential product slate.
Three years and dozens of new oil discoveries later, Guyana is set to produce its own oil for the first time ever, in 2020.
Over the past couple of years, the success rate of discoveries has been phenomenal, analysts say, and some expect that Guyana could be on the road to joining the few non-OPEC nations in the world capable of producing more than 1 million bpd of oil.
Analysts warn that potential development challenges—considering that the area has never produced oil and lacks infrastructure—and the resource curse may spoil the Guyana offshore oil party.
But as things stand now, there are more optimists than pessimists that Venezuela’s small neighbor to the east could become an oil producer capable of plugging part of the conventional oil supply gap next decade. Attractive fiscal terms, scale of resource, and reservoir quality are all there in the Liza complex operated by Exxon, according to Wood Mackenzie analysts, who estimate that the complex has accounted for 15 percent of all conventional crude oil found globally since 2015.
Two months ago, Exxon announced a ninth oil discovery offshore Guyana, which adds to already estimated resource of more than 4 billion oil-equivalent barrels discovered to date.
Exxon expects Liza Phase 1 to start producing oil by early 2020, via a floating production storage and offloading (FPSO) vessel—up to 120,000 bpd.
The Guyana discoveries have the potential for up to five FPSO vessels producing more than 750,000 bpd by 2025, Exxon says.
“Guyana has hit the jackpot,” Maria Cortez, Latin America upstream senior research manager with Wood Mackenzie, said in August, commenting on Exxon’s ninth discovery.
“If this small South American nation with, a population of about 750,000, can properly manage the billions of dollars of revenue about to come its way, it may become the richest corner of the continent.”
In Orinduik Block, another block offshore Guyana, Eco (Atlantic) Oil & Gas, which is partnering with operator Tullow Oil, announced last month that an independent analysis found that there are at least ten exploration leads with close to 3 billion barrels of recoverable oil potential in the Orinduik Block. Tullow Oil and Eco plan to drill their first well in the block in early Q3 2019.
“Guyana is the jewel in the crown, the mother of dragons. That is the hottest exploration area in the world. It’s no longer frontier, it’s a sub-mature basin,” Eco’s chief executive Gil Holzman told S&P Global Platts in an interview this month.
Guyana is a “paradise” for exploring because of the enormous resource of pure, sweet, light oil that is much easier to refine than the heavy crude of its neighbor Venezuela, Holzman said.
The exploration success rate for commercial discoveries in the Stabroek block, where Exxon has been striking more and more oil in recent years, is an “astronomical” 82 percent, compared to global industry average of below 20 percent, according to WoodMac.
The size of reserves and reservoir quality underpin the economics in the block, with project break-even of below US$40 a barrel, the energy consultancy says.
Few oil producing countries pump more than 1 million bpd—there are just ten such producers outside OPEC—the U.S., Canada, Mexico, the UK, Norway, China, Brazil, Oman, Russia, and Kazakhstan.
“New admissions to the group don’t happen very often,” Simon Flowers,Chairman and Chief Analyst at Wood Mackenzie, wrote last month.
“Guyana, with no upstream oil industry four years ago, has a very good chance of joining this elite group,” Flowers noted.
The basin as a whole may hold another 8-10 billion barrels of oil equivalent of reserves, WoodMac has estimated, but warned that extrapolating success rate can be pretty unreliable.
Guyana has the resource potential, the reservoir quality, and the favorable fiscal regime to unlock its oil potential. Rystad Energy estimates that under the current tax regime, the government will have 60 percent of the profit from various projects—more favorable than many other large offshore producers, with the government take for all offshore projects around 75 percent on average.
Rystad Energy expects Guyana’s total oil production to exceed 600,000 bpd by the end of the next decade, generating annual revenue of US$15 billion from the oil and gas industry and some US$10 billion of profit that could be split between the companies and the government.
While oil companies flock to explore promising offshore Guyana waters, the country faces a difficult task going forward—will it escape the resource curse?
(Stabroek News, 17.Oct.2018) — Representatives of Merrill Lynch Wealth Management have met with the Governor of the Central Bank of Guyana after recently indicating an interest in engaging in discussions with those charged with the responsibility of setting up Guyana’s Sovereign Wealth Fund says Minister of Foreign Affairs Carl Greenidge.
They are interested in Guyana’s proposed sovereign wealth fund, Greenidge said noting that they have a variety of expertise in the setting up of such funds, and providing options for collaboration that they can offer.
Merrill Lynch, the investment arm of the Bank of America Corporation, Greenidge told the media yesterday at a press conference held at the Ministry of Foreign Affairs, Takuba Lodge, Georgetown, asked the Guyana delegation for a meeting on the sidelines of the recently- concluded United Nations General Assembly in New York, USA.
“They wanted to be briefed on what we are doing in relation to oil and petroleum and how they might help,” he said.
Merrill Lynch, he said, was interested in speaking to those who are responsible for setting up and organising the fund. “So we channeled them to the Central Bank and the Minister of Finance (Winston Jordan).”
At the New York meeting, Greenidge said, the ministry’s function was to listen to Merrill Lynch’s officials.
“We listened to them and explained what we are doing in a variety of areas and facilitated a meeting between themselves and the Ministry of Finance. I believe the Minister of Finance was not able to see them but the Governor of the Central Bank did.”
The investment arm, he said, has capacity and extensive experience in the management of the equivalent of sovereign wealth funds. They did not discuss with them their interests, but explained, what is currently in place in relation to dealing with the fledging oil sector.
Merrill Lynch is not a stranger to Guyana, Greenidge said. When he was the minister of finance in a previous government, he said, the investment division facilitated the Bank of Guyana and the Bank of America working together. “They are not new to Guyana.”
Meanwhile, at the same UNGA meeting, the Guyana delegation to the UNGA also met with the Business Council for International Understanding (BCIU), a US-based organisation of a large number of international corporations that facilitates mutually beneficial, person-to-person relationships between business and government leaders worldwide. “I make mention of this,” Greenidge said, “so that you can understand that as a result of both the diplomatic initiative and of the development of petroleum resources, a number of these international multilateral agencies have taken an interest and would like more extensive cooperation with us.”
Interestingly, he said, the meeting was chaired by Jamaican-born Ginelle Baugh, BCIU’s Vice President of Finance.
(Stabroek News, 13.Oct.2018) — The Guyana government and the Canadian province of Newfoundland and Labrador will be signing a technical cooperation agreement on oil and gas in the coming week, when Georgetown will also be hosting a visit by a 50-odd member trade mission from the territory seeking partnerships with local companies to tap the sector.
The High Commission of Canada yesterday said in a statement that Minister of Natural Resources from Newfoundland and Labrador Siobhan Coady will be signing a Memorandum of Understanding (MoU) on behalf of her province with the Government of Guyana for technical cooperation on oil and gas.
During her visit, it noted, Minister Coady will also be attending the events organised for the visiting trade mission, which will be visiting from October 15th to October 18th, 2018.
The statement explained that the High Commission and the Province of Newfoundland and Labrador are collaborating with the Government of Guyana through GO-Invest to bring the Canadian oil and gas trade mission of approximately 50 persons from the province’s offshore oil and gas industry.
“Canadian companies are hoping to leverage partnerships with appropriate Guyanese businesses, and work with them to access opportunities in the oil and gas sector,” it noted.
“Guyana presents world-class, deep-water petroleum prospects which offer business opportunities that align with Newfoundland and Labrador’s petroleum expertise and experience. The development of potential partnerships between the two jurisdictions could serve to build strong business relationships, transfer technology, and skills development to support the growth of Guyana’s offshore oil and gas industry,” it added.
Newfoundland companies, it further said, have been servicing Floating Production Storage and Offloading vessels for over 15 years. Companies from this province have also been servicing rigs and drill ships for 40 years, it added.
According to the High Commission, the experience of Newfoundland can be a great potential resource to Guyana in developing its offshore industry through working with experienced partners, such as government and private sector, suppliers and service companies. “This trade mission will expose Canadian companies to the market opportunities, investment regime and qualified local companies,” the High Commission said, while highlighting that the local support for the trade mission so far has been overwhelming. “This highlights the willingness of Guyanese to partner with Canadians, which is largely due to the Canadian model of leveraging local partnerships through building partners’ capabilities to access together the opportunities in this nascent sector,” it added.
(Guyana’s Ministry of Natural Resources, 12.Oct.2018) — The Guyana Oil and Gas Capacity Building Project (the ‘Project’) is supported by the World Bank and aims to enhance the Government’s capacity to achieve its management goals for the petroleum sector through interventions focused on enhancing legal and institutional frameworks and strengthening the capacity of key institutions to manage the oil and gas sector in Guyana, Guyana’s Ministry of Natural Resources reported on its website.
As Guyana moves into a new chapter of history as an emerging petroleum producing nation, sustainable development lies at the core of the Government of Guyana’s goals for the sector. Being keenly aware that petroleum is a non-renewable resource, considerations related to its extraction and conversion into financial capital highlight the requirement and responsibility to ensure that the resource is prudently managed, from the time petroleum ‘appears’ at the wellhead, for the long lasting benefit of Guyana. In developing the policies, legal framework, institutions and systems to oversee and manage the sector, the Government of Guyana is committed to ensuring that this framework allows both present and future generations to reap the benefits.
Guyana’s petroleum sector is progressing swiftly with first oil expected in 2020. This planned petroleum development, coupled with ongoing assessment of new discoveries, has led the Government of Guyana to focus on ramping up preparations to oversee the upstream sector (exploration, development and production); to develop policy and legislation, to build up internal capacity building, to promote governance and transparency, and to undertake financial and economic planning.
(The National, Robin Mills, 8.Oct.2018) — One of the few major new conventional oil provinces discovered this century could see the country emerge as the top per capita producer.
Who will be the world’s largest oil producing country per person in the 2020s?
Kuwait perhaps, with 3 million barrels per day and a population just over 4 million? Saudi Arabia or, looking further afield, Brunei or Norway? No, that honour will belong to the South American nation of Guyana, which could well be sharing output of 700,000 barrels per day among just 770,000 people.
Although adjacent to Venezuela, Guyana has been better known for sugarcane, and cricketers such as Clive Lloyd, Lance Gibbs and Shivnarine Chanderpaul, than oil. But after first striking oil at Liza in 2015, ExxonMobil and partners Hess and China National Offshore Oil Corporation have made seven major discoveries in deep offshore waters, with production due to start in 2020.
Other companies, including Spain’s Repsol and African-focused explorer Tullow, are also looking. And the trend may extend into the former Dutch colony of Suriname to the east. Beyond Suriname is the overseas French department of French Guiana, where Tullow found oil in 2011 although follow-up exploration has been disappointing.
Guyana is one of the few major new conventional oil provinces discovered this century, along with the Kurdistan region of Iraq (which has subsequently disappointed) and India’s Rajasthan in 2004, Brazil’s “pre-salt” and Uganda in 2006, Ghana in 2007 and perhaps Senegal in 2014. After just four years of exploration drilling, Guyana is already set to be the biggest of these after Brazil. Estimated production costs of $46 per barrel are well below current oil prices, and competitive with shale or other leading deep-water areas.
Unlike the US’ mostly very light shale oil, Guyana’s is a medium-light crude closer to major Middle East grades. Likely to be rich in diesel when refined, it helps fill a hole in the world’s crude diet.
Finding new conventional oil is important for the global industry. Companies such as Shell, Total and Eni have increasingly shifted to gas, which has proved much easier to discover in quantity, while BP and their American peers, ExxonMobil, Chevron and ConocoPhillips, have focused on US shale. Both the International Energy Agency and Opec warn of under-investment and a coming oil crunch, but the major oil reserves in Opec countries and Russia are mostly closed off to international firms by government policy, insecurity and sanctions.
If the discoveries are significant for the world, they will be transformational for Guyana. Gross oil revenues of some $13 billion annually by the mid-2020s, or about $17,000 per inhabitant, contrast to its 2016 GDP of just $3.4bn. Only some 14 per cent of this will come to the government for the first two to three years while costs are paid off, but this is still an enormous bonanza.
But, like other new oil states, Guyana has to manage the perils of a sudden influx of wealth. It has good advice, as a member of the New Producers Group, an initiative of UK think tank Chatham House, the Natural Resource Governance Institute, and the Commonwealth, which brings together experts, politicians, government and civil society from a number of newly-established oil- and gas-producing countries.
These problems are well known but not so easy to solve. Government faces the risks of corruption, nepotism and patronage; a weakening of democracy; over-spending and vulnerability to falls in oil prices; and a lack of capability to manage oil operations and tax collection. The economy is threatened by conflicts over fiscal terms with the oil companies; the temptation to introduce wasteful energy subsidies; inflation and currency over-appreciation; and a loss of competitiveness from the non-oil sector. And the local population confronts unrealistic expectations of sudden wealth; an influx of outsiders; and environmental damage.
These issues are particularly salient for Guyana, a relatively small and poor country with quite high levels of corruption. It also neighbours troubled Venezuela, which has claimed two-thirds of its territory. Some Guyanese worry that the valuable work of oil services and contracting, a way to develop the domestic economy and skills, will be mostly supplied by next-door Trinidad and Tobago, which has a long-standing petroleum industry. The large gas resources found along with the oil also have to be used responsibly.
Much has been learned about potential solutions over the past two decades, though they come with their own conundrums. A sovereign wealth fund, like the Abu Dhabi Investment Authority or Norway’s oil fund, avoids a too-sudden influx of money; stabilises the government budget against oil price volatility; and saves for future generations. A robust political process and rules are needed to ensure the fund is not raided or diverted for pet projects.
A national oil company (NOC) helps build skills and strengthen the management of the sector. But it should not become a vehicle for handing out jobs to cronies or politicised meddling in the industry. Experienced lawyers, accountants, geologists and others are needed to staff a NOC and a petroleum regulator, and cannot be spread too thinly.
It is essential to educate the government machinery, media and civil society, so they understand how much money is coming in, and have a voice in how it is used. Bodies such as the Extractive Industries Transparency Initiative (EITI) report on oil revenues and their allocation.
Guyanese are fortunate to have contrasting examples next door in Venezuela of how a mismanaged oil sector can ruin a country; and Trinidad, where petroleum has generally been positive for the country.
International help and goodwill will hopefully ensure their oil is a bonus not just for the world economy but for the people.
Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
(Shawcor Ltd. 4.Oct.2018) — Shawcor Ltd. (SCL) announced that its pipe coating division has been assigned work from Saipem valued at approximately C$110 million to provide thermal insulation and anticorrosion coating services for the Liza I and II deepwater development projects located offshore Guyana.
Coating work under the Liza I project commenced in March 2018 at Shawcor’s Channelview, Texas facility and additional work will be completed at Shawcor’s Veracruz, Mexico facility. Work on Liza 1 is expected to be completed during the first quarter of 2019. Coating work under the larger Liza II project, which is conditional on a Final Investment Decision, or “FID”, by the pipeline operator, is expected to be executed at the Veracruz and Channelview facilities.
(Energy Analytics Institute, Ian Silverman, 29.Sep.2018) — The Energy Chamber of Trinidad and Tobago will host a forum in Guyana in November 2018, to share experiences from Trinidad’s energy sector with stakeholders in Guyana, the chamber announced in an official statement.
Details of the event will be provided at a latter date.
(Energy Analytics Institute, Ian Silverman, 20.Sep.2018) — The Energy Chamber of Trinidad and Tobago announced its agreement with an Memorandum of Understanding (MOU) signed between the governments of Guyana and Trinidad and Tobago.
The MOU recognizes development of the energy sector contributes significantly to strengthening of economic and social development while improving the quality of life of the citizens of both countries. It also commits both governments to continue the development of cooperation mechanisms to foster the creation of an environment conducive to energy integration, on the basis of the principles of reciprocity, solidarity and respect for sovereignty, the chamber announced in an official statement.
Over the past decade and more, the Energy Chamber has engaged the government and the private sector in Guyana on numerous visits and in various bilateral and regional meetings. This engagement pre-dates the discovery of oil in Guyana and many of the chamber’s member companies have operations in Guyana going back many decades. Since the discovery of oil, this engagement has accelerated, as the chamber has sought to create mutually beneficial relationships between the private-sector of both countries, according to the statement.
(Energy Analytics Institute, Aaron Simonsky, 14.Sep.2018) — Kosmos Energy continues to explore new basin potential outside of Africa.
In December 2011, Kosmos secured a position offshore Suriname, marking the company’s first portfolio expansion beyond Africa.
In Suriname, located in the north-eastern portion of South America, Kosmos participates in two blocks: Block 42 and Block 45
“The extension of the emerging oil petroleum system recently opened in Guyana, provides up to five independent plays and multi-billion barrel potential,” announced Kosmos in an investor presentation on its website.
Drilling was to have commenced in the second quarter of 2018, according to the company.
(OffshoreEnergyToday, 13.Sep.2018) — French oil major Total has exercised its option to acquire a 25 percent working interest in the Orinduik block offshore Guyana after a competent persons report identified potential for almost three billion barrels of oil equivalent.
Eco Atlantic, a partner in the Tullow-operated Orinduik block, said on Thursday that Total E&P Activités Pétrolières, a wholly-owned subsidiary of Total, exercised its option to acquire a 25% working interest in the block from Eco Atlantic.
Total decided to exercise the option following a competent persons report (CPR) announced on Tuesday. According to the CPR, the Orinduik block could potentially hold 2,9 billion barrels of oil equivalent of P50 (best estimate) reserves identified across a total of 10 leads.
Eco added that the option was exercised before delivery of the final 3D seismic data due to be delivered to Total, which would have triggered a 120-day exercise window for the option.
The option does not effect Tullow which will remain the operator and hold down its 60 percent of working interest. Following the option exercise and the receipt of all requisite regulatory approvals, Total will hold 25 percent while Eco’s interest will decrease from 40 to 15 percent.
In accordance with the terms of the option, Total will pay a fee of $12.5m to the company on receipt of all requisite approvals for the transfer of the 25 percent interest. Eco added that the payment would provide adequate funding to meet Eco’s share of the costs to drill at least two wells on the block as well as recover the costs of the completed 3D seismic survey.
Gil Holzman, CEO of Eco, said: “We are absolutely delighted that Total, one of the world’s largest oil companies, has so quickly chosen to exercise its option to acquire a 25 percent stake in our Orinduik Block to gain further exposure to offshore Guyana, currently one of the most exciting exploration areas globally.
“With Tullow as operator and the technical contribution that both Total and Eco now bring to the project, we look forward to working with these two world-class players in further progressing the exciting exploration of the Orinduik Block.”
Colin Kinley, COO of Eco, added: “Total entering the blocks four months earlier than anticipated is welcomed as they add significant technical horsepower to the interpretation and now bring them into the planning for drilling. Tullow announced last week drilling is anticipated early the third quarter of 2019.”
(Stabroek News, 7.Sep.2018) — Former presidential advisor Jan Mangal has warned that while cash payouts from oil revenue may have an important role to play in the future, at this point it could be a distraction from the larger goal of clawing back wealth.
His reference in a Facebook post today to clawing back of wealth will be seen as a reference to the widely criticised terms of the Production Sharing Agreement between Guyana and ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited.
Potential cash payouts have taken centre stage following a recent proposal by Professor Clive Thomas at a forum in Buxton.
Mangal, who has become a vocal critic of aspects of the Exxon deal and the handling of the oil and gas sector here warned that oil companies have various stages in how to make countries forfeit their wealth.
“1. The oil company and their agents will first influence the politicians. They do this very well. They do it all the time all around the world (in the rich countries as well). This has already happened in Guyana.
“2. Then they will influence the private sector by giving them some contracts. This has already happened in Guyana, judging by the words/ actions of the private sector, judging by how some prominent Guyanese have suddenly gone quiet or changed their tune (lawyers, business people, board members, etc). CSR, grants and donations also are used by the oil companies to influence people and institutions. Please take the money, but it will not help Guyana if we take the money then go quiet and stop visibly speaking out for our country.
“3. Then the most challenging is the influence of the people. But this is doable in Guyana due to its small population, its divisions, its corruption, and its flawed “winner takes all” system of governance. One way to influence the people is by direct cash disbursements to the people. Give people a couple hundred US dollars a year and they may no longer care if the royalty is 2% or 15%. Hence, we have to be careful. Direct cash disbursements have an important role to play in the future (as some have been discussing recently), but not now as an election variable, and not now as a distraction for the people. We need to focus on the more important prize, which is clawing back more of our wealth for ourselves, and also securing that wealth. The wealth will come for everyone if we work hard, do not be intimidated, and do not repeat the mistakes from other countries.
“The odds are stacked against Guyana, but Guyana can succeed”.
(Stabroek News, 6.Sep.2018) — The signing of the Memorandum of Understanding (MoU) on Energy Sector Cooperation between the governments of Guyana and Trinidad and Tobago, paving the way for cooperation in oil and gas between the two states, will proceed as planned next week, despite a call by the city chamber of commerce for it to be put on hold.
Meanwhile, the Guyana Oil and Gas Energy Chamber President Manniram Prashad has said that even though it has not seen the MoU, it will support it if it is in the interest of Guyanese businesses and the Guyanese people.
On Wednesday, Prashad’s colleague, President of the Georgetown Chamber of Commerce and Industry (GCCI) Deodat Indar called for government to hold off on the signing until the group has a clear idea of what the MoU entails.
(Stabroek News, 6.Sep.2018) — Dear Editor: How could we have billions of barrels of oil in 2018 and not be able to pay our teachers a living wage? The value of having the requisite quality of well-paid and motivated teachers of the highest calibre will reverberate across this nation in positive ways that will lift Guyana out of its morass.
Let us for this occasion set aside the multiple ways that funds can be sourced from our treasury to give at least a 25% increase to our teachers for 2018 and a 5% increase for each of 2019 and 2020. Instead, let us source the needed funds from our oil resources now.
What is more important to the development of a nation than the education of our youths? We hear so much of the importance of Science, Technology, Engineering, Math, English and Artisan skills, yet we show great trepidation in taking the necessary actions to ensure that we empower our teachers with the benefits to get the job done and stem the increasing threat of violence, robbery, idleness, underdevelopment of our youth, marginalization of our youth, alarming levels of migration, poor communication skills, a subservient culture, inferiority complex, and contract subjugation.
The leveraging of our oil resources for the benefit of our teachers and support of the sugar industry, among others; will have an immediate and positive impact on the economic welfare of Guyana. What folly it is to create a wealth fund, while our teachers and sugar workers are thrown under the truck.
We often hear of providing for future generations. I beg to differ somewhat and state emphatically that the most important generations are those among us now. And the empowerment of current generations will benefit current and future generations.
Too often our political leaders are servile, complicit, compromised, weak-kneed and spineless to the global powers that we cannot engage with Exxon’s Esso, Hess, and Nexen – mano a mano and negotiate a contract that 1) Pays a realistic signing bonus exceeding US$500 Million, 2) Increases the royalty to at least 10%, and 3) Have the partners of the Government of Guyana that signed on to the 2016 Production Sharing Agreement, disgorge themselves of the foul pre-contract costs that are doubling every two years from US$460 Million at the end of 2015 to over US$900 Million in 2018.
How many billions of barrels of oil must be found before we find ways to monetize the oil discoveries to fund our teachers and sugar industry now?
In the midst of the Exxon’s Esso oilgreeopoly we have the aptly named “Wood” McKenzie agent releasing a report dated August 31, 2018 – noting that Guyana’s Liza complex located in the Stabroek block, accounts for 15% of all conventional crude oil found globally since 2015. “Wood” clusters over several key data points, such as amount of oil in the Liza complex, acreage of the Liza complex, location of the other 85% of crude oil found since 2015, and unsurprisingly, the amount of royalty for the owner of the oil: Guyana.
Wood McKenzie then gloats over the triple play for Esso, Hess, and Nexen, comprising of attractive fiscal terms, scale of resource, and oil reservoir quality.
How foolish it is that we have billions of barrels of oil in our backyard and we can’t pay respectable salaries for our teachers and support our sugar industry. Are our negotiating skills so hollow and inept that we can’t use monetary value leverage, with the billions of barrels of oil, to benefit Guyanese in need now; starting with our teachers, sugar workers and nurses.
More probably the failure to leverage the billions of barrels of oil has more to do with the despicable 2016 oil contract that Guyana signed away with Exxon’s Esso and its partners for a measly 2% and other superficial benefits.
With 123 Billion acres of land and water on earth – 29% land and 71% water; our beloved Guyana has been blessed by nature, providence and divinity to have Guyana’s Stabroek Block, comprising 0.005% of the earth surface and containing billions of barrels of oil offshore. Let us have the courage to demand that the resources in our 0.005% offshore, secures a contract that is best for Guyana’s ascendancy and provides a livelihood commensurate with our oil wealth: for our teachers, sugar workers, nurses, pensioners, youths and provide financial support for our industries and build infrastructure that will propel us to developed country status.
(Reuters, 5.Sep.2018) — Tullow Oil plans to drill its first well in the much-watched Guyana offshore basin in the third quarter of next year in its Orinduik licence bordering discoveries by Exxon, a spokesman said on Wednesday.
Exxon and U.S. partner Hess Corp have said that more than 4 billion barrels of oil equivalent could be recovered from the Stabroek block off Guyana, which is part of one of the world’s biggest oil discoveries in the past decade.
Tullow owns 60 percent and Eco Atlantic Oil and Gas 40 percent in Orinduik. Total has an option to buy 25 percent from Eco.
“Hammerhead-1 is located approximately 7 km from the Orinduik licence boundary … Hammerhead-1 found material oil in turbidite channel systems,” the Tullow spokesman said of a recent Exxon discovery in the Stabroek block.
“Our 3D seismic (data), which includes Hammerhead, shows that these channel systems extend up-dip (?) into the Orinduik licence. We will now pick the well location for our first well on this licence and remain on track for drilling that well in the third quarter of 2019.”
Tullow also has a 37.5 percent stake in the Kanuku licence offshore Guyana alongside Repsol and Total. It also owns stakes in two blocks off Guyana’s neighbour Suriname, where its partners are Ratio, Equinor and Noble.
(Reporting by Shadia Nasralla; Editing by David Goodman and Mark Potter)
(CNNMoney, Talib Visram, 4.Sep.2018) — The South American country with the smallest GDP is about to burst with oil.
ExxonMobil found oil off Guyana’s coast in 2015, and believes the reserves are big. Conservative estimates project to about 4 billion barrels. Some experts think there’s more to be found in the country’s 6.6 million-acre Stabroek Block.
But how Guyana prepares for the windfall from a newly discovered fossil fuel repository will have big ramifications for its future.
For a country with a population of fewer than 800,000 and a GDP of slightly more than $6 billion, the discovery is life changing.
“There’s a realistic chance of this transforming the economy,” said Pavel Molchanov, senior vice president and equity research associate at Raymond James. “It’s particularly impactful for a small country like Guyana.”
When the first oil starts to flow, which ExxonMobil hopes will be in 2020, Guyana could reap billions almost immediately.
By 2025, ExxonMobil wants to produce 750,000 barrels of oil per day.
History contains numerous cautionary tales about countries that have squandered a sudden surge of riches.
Venezuela struck oil centuries ago, but in 1998 the government of Hugo Chávez installed political loyalists into top jobs in the nationalized oil industry and began diverting the revenues into social programs. The country failed to reinvest into its oil infrastructure and when oil prices crashed, so did Venezuela’s economy. Now, even basic goods like food and medicine have to be imported. Hyperinflation is soaring and the IMF predicts it’ll hit a rate of 1,000,000% by the end of 2018.
Corruption, infrastructure and unexpected market forces could present challenges for Guyana, too.
The democratic republic comprises two political parties made up of descendants of African slaves on one side and descendants of Indian indentured servants on the other.
The fear is that the government in power could unfairly favor its ethnic constituents.
At the moment, the Afro-Guyanese party, the PNC, is running the government. But there’s an election in 2020, which could decide who controls the purse strings.
“I wouldn’t discount civil unrest, even for such a small country,” said Eileen Gavin, senior politics analyst at Verisk Maplecroft.
Guyana should also be aware of “Dutch disease,” a phenomenon in which existing industries are forgotten in favor of a new one. Guyana currently makes most of its revenue from exporting gold, bauxite, sugar and rice.
Some countries have handled windfalls well, and not spent everything at once. Notably, Norway set up an “oil fund” for investing surplus revenues to benefit future generations.
Most experts agree that Exxon’s contract with Guyana is favorable toward the oil giant. The IMF recently advised the Guyanese government to revise the contract for future deals, stating that its tax laws are “well below what is observed internationally.”
But some say that a contract in Exxon’s favor at this point is to be expected, given Guyana’s lack of experience and infrastructure for the extraction.
“Nothing had ever been found in Guyana before,” said Ruaraidh Montgomery, senior analyst at Wood Mackenzie. “So, it’s high risk in a frontier area. They needed to offer appealing fiscal terms to attract investors.”
And as the oil is tapped and more is found — and the investment risks disappear — Montgomery said Guyana, a “world-class hydrocarbon basin,” would probably tighten its future contracts.
For now, Guyana is doing everything right on paper in preparation, said Gavin. It’s due to establish a sovereign wealth fund this year, and has joined the EITI, an organization that helps countries “manage hydrocarbon reserves in a fiscally responsible manner.”
But it’s still too early to tell. “The proof of the pudding will be in 2020, when the revenue starts to flow,” Gavin said.
(Stabroek News, 2.Sep.2018) — Trinidad Opposition Leader Kamla Persad Bissessar has raised the prospect of Guyana oil being used to rescue the beleaguered Petrotrin refinery but Prime Minister Keith Rowley last evening said the aged facility had no reasonable prospect.
Defending the decision by his government to close the over 100- year-old refinery, Rowley yesterday said he had no choice as the climbing debt was too much to saddle his country’s taxpayers with.
“Petrotrin was overburdened with debt. The net debt at financial year-end 2015 amounted to TT$11.4 billion,” Rowley told the twin-island nation in an address which was live streamed.
According to the Trinidadian Prime Minister, “Left as it is, Petrotrin will require an immediate TT$25 billion cash injection just to stay alive” and “there is no way that the company can find this money” as “no financier will lend it because the company simply will not be able to repay such an additional loan.”
He believes that it would be more feasible for the country to focus on exploration and production and export the 40,000 barrels of oil equivalent per day it produces and import the 25,000 barrels it needs for consumption.
“Today with a refining capacity of 140,000 barrels per day, the local production available for refining is 40,000 barrels. We really depend, mostly, on a daily importation of 100,000 barrels per day, which we refine at a significant loss.”
He would later add, “We consume less than 25,000 (barrels) of refined products. It makes far more sense to export the 40,000 that we produce and import what we need. Each barrel will be sold externally on the open market.”
Last week Tuesday it was announced that Petrotrin’s refining and marketing operations would be shuttered. With TT$8 billion in losses in the past five years and a bullet payment of US$850 million due in 2019, Petrotrin chairman Wilfred Espinet had said that terminating its refining and marketing operations and retrenching 1,700 permanent and casual employees was the only way to save the company after 100 years of operations in the industry. Petrotrin also owes the Trinidad Government more than TT$3 billion in taxes and royalties.
Rowley’s position last evening came even as that country’s former Prime Minister, Persad Bissessar called on him to pursue negotiations with Guyana to refine its oil there in order to save the company.
“I understand Guyana has found another well … can we not group in some way and find a way to work together as a CARICOM where we can help them refine their oil,” she told reporters on Saturday at her Legal Clinic Siparia Constituency Office and which was reported by the Trinidadian newspaper Newsday. Guyana won’t begin pumping oil before 2020.
“I am calling on him to let good sense prevail to be very cautious in making such a drastic and dangerous move, this will have a ripple effect throughout the economy and the country…of course they (Guyana) will build their own refinery but we have one and many of the units in the refinery at Petrotrin are new, so a lot of money has been invested on the refinery side and now they are shutting it down. It is total nonsense,” she added.
Currently, it is still unclear what the Guyana Government would do with its share – 12.5% – of profit oil from 2020 onwards, from its agreement with ExxonMobil but one government official said that several options are being explored.
One Minister yesterday said that it “Is an ongoing discussion and several workshops and engagements have been held. The options are to ask Exxon or to market, do our own marketing or take our share in kind and send it for refining somewhere. Several proposals have been received and the final decision-making process will be guided by the Department of Energy.”
Sources have told this newspaper that it has been suggested to the government that Guyana “takes a stake in the Petrotrin refinery and in this way acquire a strategic asset.” In that way, according to one source, Guyana could have its share of oil from the agreement with ExxonMobil and affiliates refined closer to home and secure jobs for persons in both countries.
But while it is still too early to tell what the Guyana and Trinidad governments will decide, a source said, “Guyana may gain a controlling or sizeable share and develop refining capacity and meet many of the outcomes from having a refinery without having to pay as much. Additionally, we can ensure that a percentage of labour is Guyanese who will have to be trained and also we can address some CARICOM integration goals.”
Last evening, the Trinidad PM made no mention of Guyana or even hinted at restarting the refinery although he said that Petrotrin’s refinery assets would be placed in a separate company.
“We largely operate a business that is largely dependent on foreign oil inputs. All the other refineries in the region that had this same business model, Aruba, Curacao and St Croix have long since closed because they saw it as not a viable business,” Rowley said.
“Our Pointe-à-Pierre refinery is 101 years old and has reached the end of its commercially viable days it is now at a state where it is haemorrhaging cash and the cost of rehabilitating it is way more than its potential to ever be potentially viable, competitive or sustainable. The only commercially sound and viable option is to close the refinery, export Petrotrin’s oil and to import products,” he also noted.
The government of the US Virgin Islands last month approved a proposed US$1.4-billion operating agreement between itself and Arclight Capital Partners LLC, Boston, to restart the former Hovensa Refinery at Limetree Bay, St Croix. The refinery is scheduled for opening by the end of 2019. With an initial crude processing capacity of about 200,000 barrels per day according to the USVI government, the investment is expected to create 1,200 local jobs during construction and as many as 700 permanent jobs upon restarting the facility. The Hovensa refinery was a joint venture between Hess Corporation and Petroleos de Venezuela until it closed in 2012.
Rowley said that the Petrotrin model has outlived its usefulness and it was now time to accept that and equip the company to stand the test of the ever changing global economy.
“Petrotrin’s model has become obsolete and uncompetitive and its operating practices are inefficient. The company was nowhere in line with global industry standards and best practices. In fact the company’s operations are identified as being among the most inefficient in the world. The company if left as it is would continue to operate at a loss at a rate of aboutTT$2B a year. It is not a viable option, to do so is to saddle future generations with a huge debt burden. If not dealt with now, the negative effects will get worst and it simply cannot work. To break even would cost TT$7B and would involve significant staff cuts and an ultra-low sulphur refinery,”
He believed that the “Gross mismanagement of the national patrimony within the last decade” such as many cost overruns and delays in projects for the company was part of the reason government is now saddled with the large debt.
A committee, headed by TT’s former Energy Ministry Permanent Secretary, Selwyn Lashley, had reported on the dismal state of the company since 2016 and the report showed that in addition to receiving huge subsidies from the state, Petrotrin was not paying its fair share of taxes collected to government.
“Taxes and royalties owed to Government amounted to $3.1 billion as at February 28, 2017. The company was not complying with the tax laws and even when it collected taxes from companies that paid their taxes to Petrotrin for onward transmission to the Ministry of Finance, Petrotrin was huffing and utilizing those monies in its own operations.”
“Money that should be turned over to the Ministry of Finance is held within the company and that is illegal,” he added.
(Stabroek News, Marcelle Thomas, 2.Sep.2018) — A long-delayed Memorandum of Understanding (MoU) between Guyana and Trinidad on energy cooperation is expected to be signed in the coming weeks, according to Trinidad and Tobago’s Minister of Energy, Franklin Khan.
“The Government of Trinidad and Tobago is due to sign a memorandum of energy cooperation in the coming weeks, most likely there in Georgetown,” Khan told Sunday Stabroek via telephone.
The minister did not go into the details of the agreement and said that would be disclosed after the signing. He, however, emphasised that his government is willing to offer its assistance as this country prepares for first oil. “When the Government of Trinidad and Tobago is in Guyana, yes we will offer help and advice to the Government of Guyana on your emerging oil and gas sector and obviously seek their concurrence…,” Khan said.
No official from government was available for comment or to give details on what the agreement would contain. Minister of State Joseph Harmon, who is the minister responsible for oil and gas matters, was out of the country and would not be back until next week, his office said. Several calls to the recently-appointed Head of the Department of Energy, Dr Mark Bynoe, went unanswered.
Since 2016, discussions commenced between Guyana and Trinidad on an MoU under which the latter would provide various forms of support to the oil and gas sector in Guyana. Initiated during a visit here in 2016 by a Trinidad and Tobago delegation led by the then Energy Minister Nicole Olivierre, the MoU was expected to be signed at the end of that year but that did not happen. At the time, Minister of Natural Resources Raphael Trotman had said that the pact would see Guyana receiving support in a range of areas, including advanced technical training for local personnel in the industry.
News of the proposed energy cooperation agreement between Georgetown and Port-of-Spain comes days after the Trinidad and Tobago government inked an agreement with Venezuela to import natural gas from the Spanish-speaking country. That agreement would see the twin-island republic purchasing some 150 million standard cubic feet of natural gas per day from Venezuela’s prolific Dragon Field.
Meanwhile, sources told Sunday Stabroek that it has been suggested to government that Guyana “takes a stake in the Petrotrin refinery and in this way acquire a strategic asset.” In that way, according to one source, Guyana could have its share of oil from the agreement with ExxonMobil and affiliates refined closer to home and secure jobs for persons in both countries.
Last Tuesday, it was announced that Petrotrin’s refining and marketing operations would be shuttered. With TT$8 billion in losses in the past five years and a bullet payment of US$850 million due in 2019, Petrotrin chairman Wilfred Espinet had said that terminating its refining and marketing operations and retrenching 1,700 permanent and casual employees was the only way to save the company after 100 years of operations in the industry. Petrotrin also has a TT$12 billion debt and owes the Trinidad Government more than TT$3 billion in taxes and royalties.
According to the Trinidad Guardian newspaper, the Oilfield Workers’ Trade Union (OWTU) leader, Ancel Roget, had warned that the refinery will be sold to private investors, but Espinet had dismissed this, saying, “There is no likelihood of that refinery being sold.”
Khan told Stabroek News that Petrotrin’s closure does “not really” affect the opportunity for Guyana to still look to T&T to refine its oil or look elsewhere. “We have decided to close the refinery because of its present configuration and cost structure. It is losing money and it’s not sustainable in its current form,” he said. “However, other business models could be proposed,” he added.
But while it is still early to tell what the Guyana and Trinidad government will decide, a source said, “Guyana may gain a controlling or sizeable share and develop refining capacity and meet many of the outcomes from having a refinery without having to pay as much. Additionally, we can ensure that a percentage of labour is Guyanese who will have to be trained and also we can address some CARICOM integration goals.”
A government official believes that Guyana has to be mindful of such a move, given the recent agreement Trinidad inked with Venezuela and this country’s longstanding border controversy with Venezuela. “We have to be mindful of a growing relationship between Venezuela and Trinidad and Tobago and won’t want to compromise our energy security by having the asset in a nation where the government grows uncomfortably close with our main detractor…Venezuela may try to influence the [Trinidad and Tobago’s] relationship with Guyana,” the official said.
Khan was asked about possible perceptions and future implications of his country’s agreement with Venezuela but would only say, “We know of all the geopolitics and so on and will answer those questions then.” As to whether the government of Guyana ever discussed acquiring a stake in the now defunct Petrotrin refinery with Port-of-Spain, Khan said neither him nor his government has ever had that discussion.
Currently, it is still unclear what government would do with its share – about 14 percent – of profit oil from 2020 onwards, from its profit sharing agreement with ExxonMobil. As of last year, before the Department of Energy was formed, Trotman had ruled out this country investing in an oil refinery.
“We have done some studies on the feasibility of an oil refinery. We have opened that study for public debate and discussions… Government has concluded that it, as a government, cannot spend US$5 billion dollars in an oil refinery,” he had said.
The US$5 billion sum he referred to was the figure that Director of Advisory Services at Hartree, Pedro Haas, had told government it would cost to build a refinery here. Haas was hired by the David Granger-led APNU+AFC government to carry out a feasibility study for an oil refinery in Guyana. From his analysis, the cost to construct such a facility would be some US$5 billion, with at least half the invested amount lost upon commissioning.
ExxonMobil was asked by this newspaper if it has decided on a refining company to whom it would sell its share of crude. Through its Public and Government Affairs Officer Deedra Moe, the company responded: “We sell crude oil on the open market. ExxonMobil has an equity crude oil marketing group – an integrated operations, logistics and trading team – that operates around the world and is responsible for marketing ExxonMobil’s global production of crude oil and condensates.”
And while Guyana prepares for first oil in 2020, the government of the US Virgin Islands last month approved a proposed US$1.4-billion operating agreement between itself and Arclight Capital Partners LLC, Boston, to restart the former Hovensa Refinery at Limetree Bay, St Croix. The refinery is scheduled for opening by the end of 2019. With an initial crude processing capacity of about 200,000 barrels per day according to the USVI government, the investment is expected to create 1,200 local jobs during construction and as many as 700 permanent jobs upon restarting the facility. The Hovensa refinery was a joint venture between Hess Corporation and Petroleos de Venezuela until it closed in 2012.
Hess is one of the partners in ExxonMobil’s 6.6 million acres Stabroek Block operations, which last week announced its ninth oil discovery.
Moe was asked if ExxonMobil was looking at refining in St. Croix and responded, “I am not aware of anything regarding St. Croix.”
(Kaieteur News, Abena Rockcliffe-Campbell, 31.Aug.2018) — Ordinary Guyanese who do not fully understand the fiscal regime of Guyana’s deal with oil giant, ExxonMobil might get excited each time a new discovery is made. On the other hand, Opposition Leader Bharrat Jagdeo indicates that he cringes.
Yesterday, ExxonMobil announced another find offshore Guyana. The discovery of approximately 197 feet (60 metres) of high-quality, oil-bearing sandstone reservoir at the Hammerhead-1 is the ninth discovery of oil in the Stabroek Block offshore Guyana and the fifth within the last year.
There was a bit of silence from Jagdeo yesterday while speaking about the find. When he began speaking again, he said, “It drifts me off when I think about how much we are losing. It trips me a bit.”
Even though ExxonMobil is already at its ninth discovery, the company is far from exploring most of the Stabroek, which it has control of.
Jagdeo said that it is rather unfortunate that all these discoveries being made are falling under that same contract that most right thinking people have concluded is stacked in the interest of ExxonMobil.
“This ninth discovery will be processed through the same old contract…The thing is that the President has no clear position. When I told him of my concerns, he said that they are strengthening and so moving forward. No specific answers to my questions. I hope you have better luck.”
Jagdeo continued, “I did not get any clear answer but he said that they have just hired somebody to strengthen the department.”
Further, Jagdeo said that during his meeting with the President yesterday, “I raised the issue about the confusion that the government itself said no future contract would be negotiated on the same terms as ExxonMobil. But they are yet to define to the country what the new terms will be.”
Jagdeo told the media that the Opposition is very concerned that while the government declared that it will ensure better terms, “they are proceeding to give the exact same terms that ExxonMobil got through side approaches. You recall our position in the (National Assembly) when that proposal was made to give Mid-Atlantic some similar concessions.”
Jagdeo recalled that the PPP’s position was to defer the handing out of the concession until the framework for future negotiations was arrived at.
Jagdeo said he “asked the President directly, ‘are you going to be tendering future blocks’ but the President did not give any straight answer.
“He agrees that we now have more people who want blocks than we have available. This is the reverse of what we had in the past. I said to him, the only way we can avoid middle men creaming the benefits is to go to tender – auction, so the money will accrue directly to the people, the taxpayers.”
But, according to Jagdeo, the President still could not give perspective on the way forward.
The Guyana reserve is one of ExxonMobil’s biggest assets worldwide.
Discoveries of approximately four billion oil-equivalent barrels were made on the Stabroek Block prior to yesterday’s announcement. Discoveries were made at Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora and Longtail with the potential for up to five floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels per day by 2025. Prior to Hammerhead-1, which is located approximately 13 miles (21 kilometres) southwest of the Liza-1.
A second exploration vessel, the Noble Tom Madden, is due to arrive in Guyana in October to accelerate exploration of high potential opportunities and will commence drilling at the Pluma prospect, approximately 17 miles (27 kilometres) from Turbot.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is the operator and holds 45 percent interest in the Stabroek Block.
(ExxonMobil, 30.Aug.2018) — Irving, Texas-based ExxonMobil has made its ninth discovery offshore Guyana at the Hammerhead-1 well, marking its fifth discovery on the Stabroek Block in the past year and proving a new play concept for potential development.
Hammerhead-1 encountered approximately 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 feet (4,225 meters) depth in 3,773 feet (1,150 meters) of water. The Stena Carron drillship began drilling on July 27, 2018.
“The Hammerhead-1 discovery reinforces the potential of the Guyana basin, where ExxonMobil is already maximizing value for all stakeholders through rapid phased developments and accelerated exploration plans,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Development options for Hammerhead will take into account ongoing evaluation of reservoir data, including a well test.”
Hammerhead-1 is located approximately 13 miles (21 kilometers) southwest of the Liza-1 well and follows previous discoveries on the Stabroek Block at Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora and Longtail. Those previous discoveries led to the announcement of an estimated recoverable resource of more than 4 billion oil-equivalent barrels discovered to date, and the potential for up to five floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels per day by 2025.
There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling. A second exploration vessel, the Noble Tom Madden, is due to arrive in Guyana in October to accelerate exploration of high potential opportunities and will commence drilling at the Pluma prospect approximately 17 miles (27 kilometers) from Turbot.
Liza Phase 1, which is expected to begin producing oil by early 2020, will use the Liza Destiny FPSO vessel to produce up to 120,000 barrels of oil per day. Construction of the FPSO and subsea equipment is well advanced. Pending government and regulatory approvals, Phase 2 is targeted for sanctioning by the end of this year. It will use a second FPSO designed to produce up to 220,000 barrels per day and is expected to be producing in 2022. A third development, Payara, will target sanctioning in 2019 and use an FPSO designed to produce approximately 180,000 barrels of oil per day as early as 2023.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate, 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.
(Kaieteur News, 29.Aug.2018) — The Open Society Institute (OSI) is appealing to Government to keep a watchful eye on how ExxonMobil plans to dispose of potentially hazardous waste while operating here.
The OSI is an international body that aims to shape public policy to promote democratic governance, human rights, and economic, legal, and social reform.
According to OSI, the environmental consequences of oil are substantial throughout the entire process of development. The Institute said that each stage of the process—exploration, onshore and offshore drilling, refining, pipelines and other forms of transportation—poses serious risks to the ecology and public health.
It said that every environmental medium—air, water, and land—is affected. The Institute said that the degree of environmental harm is determined by operator responsibility, government oversight, and conditions in particular ecosystems. Even in heavily regulated environments, some damage occurs it said.
Further to this, the Institute explained that the disposal of oil wastes from offshore drilling operations is another significant environmental concern. In this regard, the Institute said that an oil platform uses nearly 400,000 gallons of sea water daily as drilling fluids in the extraction process, and, following its use, this oil-tainted water is discharged back into the ocean.
The Institute said, “One of the apparent impacts of offshore discharges has been mercury pollution; eating contaminated fish is increasingly regarded as a substantial cause of human exposure to mercury.
A study found that mercury levels in the mud and sediments beneath oil platforms in the Gulf of Mexico were 12 times higher than acceptable levels under U.S. Environmental Protection Agency standards.”
The OSI said that the only way to solve the problems caused by offshore discharges is to capture the wastes and dispose of them in a properly lined waste disposal site on land. It said that Guyana’s Environmental Protection Agency needs to keep a close eye on this area.
(Energy Analytics Institute, Aaron Simonsky, 22.Aug.2018) – Energy infrastructure on the twin-island nation of Trinidad and Tobago appears to be OK after an earthquake yesterday in Venezuela.
The August 21, 2018 earthquake hit the northern coast of Venezuela, and was felt in neighboring Colombia, Trinidad and Tobago and Guyana.
“Buildings stood up. Industrial plants stood up. Energy infrastructure stood up. Most of the electricity supply, internet services, telecoms, water supply were uninterrupted. No lives lost. No serious injuries. Yes, we had some property damage but lots to be grateful for T&T,” wrote Strategic Energy Advisor Kevin Ramnarine, who is also the Former Energy Minster of Trinidad and Tobago, in a twitter post.
(Stabroek News, 21.Aug.2018) – A powerful earthquake has hit the northern coast of Venezuela with a magnitude of 7.3, according to the U.S. Geological Survey. It had been originally reported as a 6.8 event but this has since been upgraded to 7.3.
Reuters reported that the quake, which was centred near the town of Guiria, was felt as far away as the capital, Caracas, where it shook buildings, witnesses said.
According to Reuters, the U.S. Pacific Tsunami Center said the quake, which was fairly deep, could cause small tsunami waves along the coast near the epicenter, 23 miles (37 km) southwest of the town of Carupano.
A magnitude 7.3 quake is considered major and is capable of causing widespread, heavy damage, but the quake was 76.5 miles (123.11 km) deep, which would have dampened the shaking.
The Trinidad Express this afternoon said that reports are beginning to come in of widespread damage and destruction on the twin-island republic
Buildings have sustained structural damage, cars have been flattened by falling concrete and supermarkets are reporting losses, the Express said.
There is also significant loss of telecommunication being reported, the newspaper report added.
Strong tremors were felt in Georgetown and surrounding areas around around 5.30 this afternoon.
Guyanese have begun reporting their experiences with the tremor. There are reports that it was felt severely in the northwest of Guyana which is much closer to the epicentre of the earthquake.
East Bank Demerara residents reported feeling the walls of their homes moving as well as trees and power lines swaying.
In Georgetown, some buildings shook and residents streamed into the streets but there have been no immediate reports of any damage.
Head of the Civil Defence Commission, Kester Craig said on his Facebook page that there is no Tsunami Warning for Guyana at the moment. The Hydrometeorological Service is monitoring and would provide the necessary updates, he said.
“I feel like I’m about to faint. I’m shaking. It was long,” said telemarketing worker Sheny Fuentes, 22, speaking outside her work building in eastern Caracas told Reuters. “I’m relieved that it doesn’t seem like damage was that bad. We would have been even more affected (given Venezuela’s economic crisis) – there are already people eating from the garbage and buildings aren’t well made,” she told Reuters.
(Energy Analytics Institute, Piero Stewart, 15.Aug.2018) – If all goes off as planned, by 2025, Guyana will be the 5th largest oil producer in the Latin American and Caribbean region.
That’s according to an analysis of data posted by Trading Economics, and extrapolation of estimates of Guyana’s future oil production, as announced by Kevin Ramnarine, the former Energy Minister of Trinidad and Tobago.
Considering initial production of 120,000 barrels per day in 2020, Guyana will first occupy the spot as the 7th largest oil producer in the LAC region, assuming no drastic changes in the other countries’ production profiles over the next couple of years.
However, in the process, by the time peak production is reached five years latter, Guyana will have surpassed OPEC producer Ecuador, assuming production in that country, as well as others, doesn’t experience a drastic decline, as has been the case in Venezuela in recent years.
(Energy Analytics Institute, Piero Stewart, 15.Aug.2018) – The three promised to return to discuss all things Guyana again in six months as the small South American country eyes first oil in 2020.
A three person panel — comprised of Guyana’s Minister of Finance, the Honourable Winston Jordan, Trinidad and Tobago’s Former Energy Minister Kevin Ramnarine, and hosted by Caribbean Economist Marla Dukharan — discussed issues related to Guyana included but not limited to oil, economics, finance, supply issues, infrastructure, and migration, among others (watch the full video below).
What follows are brief highlights as posted during the webinar under the Twitter hashtag #LatAmNRG:
From Kevin Ramnarine …
— “In Guyana, we have moved from 1 to 8 discoveries,” Ramnarine says. He continued: “With an 80% success rate, only 2 wells have been dry.”
— “The whole world is talking about Guyana,” Ramnarine says.
— “Oil production in Guyana is expected to come online at 120,000 barrels per day d in 2020 and peak at 750,000 barrels per day by 2025, according to Exxon,” Ramnarine says.
— “In the early years, Exxon will likely recover Capex. Then, by 2025 we could see an exponential rise in revenues [in Guyana],” Ramnarine says.
— “An infrastructure deficit in Guyana has slowed development in the interior of the country,” Ramnarine says.
— “You want a competitive oil and gas sector that supports that sector,” Ramnarine says.
— “The private sector should take the lead to develop [Guyana’s] infrastructure,” Ramnarine says.
From Winston Jordan …
— “ExxonMobil has put Guyana on the map,” Jordan says.
— “We see ourselves as the Dubai of the Caribbean,” Jordan says.
— “Guyana has infrastructure and human capital resources deficits,” Jordan says.
— “The Guyana tax system is expected to become more efficient in the future,” Jordan says.
— “The best intentions can obviously go wrong,” Jordan says referring to a question related to corruption.
— “We have a lot of challenges, but none are insurmountable,” Jordan says.
— “Guyana is putting together a migration policy to give certain benefits to those wanting to return home,” Jordan says.
— “Guyana will seek a loan with the World Bank to assist in the migration process,” Jordan says.
— “There is no definite word yet about a future refinery in Guyana,” Jordan says.
(With special assistance from Melissa Marchand, who moderated the Q&A session).
(Energy Analytics Institute, Pietro D. Pitts, 14.Aug.2018) – On a per capita basis, Guyana is already probably the most resource-rich country on the planet, but is still the poorest English-speaking country, and the 2nd poorest overall after Haiti, writes an Caribbean region economist.
As the size of oil discoveries in Guyana begin to suffer from diminishing marginal stock-value, attention is shifting to the billion-dollar question – will Guyana somehow leapfrog itself into the region’s shiny new Norway, or devolve further into resource-cursed-istan? That’s the question posed by Caribbean Economist Marla Dukharan in her August “Caribbean Monthly Economic Report.”
“Like true West Indian cricket fans, we pray despite formidable odds for Guyana’s success but we smell the molasses-like bittersweet stickiness of corruption and all its concomitant dysfunctionality,” she writes.
(Jamaica Gleaner, CMC, 8.Aug.2018) – Regional commission ECLAC is reporting that foreign direct investments, FDI, in Guyana increased to US$212 million last year in part as a result of the oil and gas sector preparing for First Oil.
Guyana has “bucked the trend” for flows to Latin America and the Caribbean as a region, which contracted 3.6 per cent last year, said the Economic Commission for Latin America.
“FDI grew in all sectors, except in manufacturing,” said ECLAC in a report on regional FDI flows. “The energy sector received US$90 million as part of a first wave of inward FDI related to ExxonMobil’s discovery of major oil reserves off Guyana’s coast. While it continues with its successful exploration efforts, ExxonMobil decided to launch the first development phase of the Liza field with an investment of US$4.4 billion,” the report added.
ExxonMobil expects to begin oil extraction in 2020.
The report also noted that Guyana hopes to take advantage of the international interest in the oil finds to promote other sectors, such as agriculture and mining.
“In the latter, Canadian mining company First Bauxite Corporation announced a bauxite production project valued at US$50 million, with construction of facilities set to begin in 2018,” ECLAC said.
Meanwhile, Guyana is putting together a list of priority projects it wishes to complete with resources provided under the China Belt and Road Initiative.
Under a Memorandum of Understanding signed with China, Minister of State Joseph Harmon said at a press briefing that Guyana will be able to tap into resources from the Belt and Road, which is intended to make available resources to recipient countries for projects related to transportation, and information and communications technology.
Guyana has now joined Panama, Bolivia, Trinidad & Tobago and Antigua & Barbuda as countries in Latin America and the Caribbean that have signed on to the initiative.
(Energy Analytics Institute, Jared Yamin, 2.Aug2018) – Noble Tom Madden will return to active status following contract award.
Following the close of the second quarter of 2018, the drillship Noble Tom Madden was awarded a contract for work offshore Guyana, which includes two firm wells, plus three optional wells, announced Noble Corporation in an official statement.
Reactivation of the rig from its warm stacked status has begun, with the contract expected to commence in October 2018, the company said in the statement.
(Department of Public Information, Guyana, Alexis Rodney, 2.Aug.2018) – President David Granger said today that he is confident of the work that will be executed by the recently appointed head of the newly established Department of Energy, Dr. Mark Bynoe as the unit takes off the ground.
Dr. Bynoe, an Environment and Resource Economist was appointed to the post by President Granger. He officially took up the appointment on August 1. According to President Granger, Dr Bynoe will be tasked with identifying qualified persons to be part of the department.
“We have been searching for someone who is experienced, not necessarily in petroleum, but who has the intelligence and the experience to find people who are experienced for the important industry… He knows enough to find people to make that sector functional,” the president told the media today.
He added that the government over the last seven months has been examining the state of the energy industry, especially following the recommendation by Minister of Natural Resources Raphael Trotman that a department be established for this.
Dr. Bynoe has the responsibility of embarking on a four-phase programme for the establishment of the department.
The first phase is administrative in which he will assemble a team of people to work in the department, President Granger said. The second is the issue of rationalisation. The Head of State said the petroleum units, within the Ministry of Natural Resources and other ministries, will have to be transferred to the department of energy. The government is also looking at the operationalisation of the department.
“A lot of work has to be done, we have to advertise for experts all over the world and we have to look at drafting legislation, look at financing and we have to look at all aspects of the operationalisation of the department “.
He said it is “an early day yet”, however, he hopes that much of the work will be completed within the month of August.
(Stabroek News, 31.Jul.2018) – Dear Editor, The discovery of oil by ExxonMobil in 2015 has put Guyana on a trajectory to receiving significant revenues. A recent Bloomberg article pointed out that of the 10 wells that ExxonMobil has drilled, 8 are commercially viable – with an estimated 4 billion barrels of oil in these areas; and, with an additional 19 more wells to be drilled this oil reserve estimation will increase exponentially. Exxon predicts that the first oil flow is expected in 2020. In preparation for oil wealth, the country needs to reorient itself to ensure that its citizens get maximum benefits. Experiences around the world have shown that the countries that fail to put the relevant systems in place can reap a curse instead of a blessing. Many economists such as Brahmbhatt and Canuto (2010) and Brahmbhatt, Canuto and Vostroknutova (2010) explain how certain conditions could lead to a curse, “Weak governance and corresponding poor economic policies underlie the misallocation and mismanagement of resources”. The Guyanese economy is no exception.
There is no doubt that the government is talking up the oil and gas sector. The talk has escalated to the point where there is “too much “gas” and very little substance. It is clear that the Granger government is overwhelmed by the enormity of the tasks in the sector. There is a lack of leadership, with confused and conflicting signals coming from various sections of government, and if this continues, it would undoubtedly undermine this nascent sector.
The government has failed to create the appropriate legislative framework. The flawed petroleum bill is languishing in a special select committee, and the other relevant legislation related to the growth and development of the sector has not been laid in the parliament. The department of oil and gas which would be the government’s lead agency for the industry is yet to be established. Legislation, policies and implementation plans on local content are still in its conceptualisation stage. Also, the IMF in its 2018 Article IV Consultation with Guyana on July 2018 warned that the “rules-based fiscal framework for managing oil wealth should be transparent and consistent with the resource fund deposit/withdrawal rules. “In the meanwhile, very few local companies have been able to realign themselves to benefit substantially from the business opportunities. With first oil expected in 2020, the government seems quite ill-prepared to inoculate itself again the “Dutch Disease” where volatility, risks of over-borrowing and overconsumption, and crowding out of local manufacturing can quickly spread in the economy. The Granger government’s incompetence is manifested in the oil and gas decision making, at best it is indecisive, and at its worst it is paralytic. And when it finally makes the decision it has an uncanny knack for amalgamating the worst options.
The Granger government needs to urgently get its act together, in the oil and gas sector. It should be guided by international best practices that would ensure that this country gets the maximum benefit from its natural resource wealth. All Guyanese would like to see policies in this sector, that provide transparency and strengthened checks and balances for all phases of natural resource extraction and use (terms of contracts, monitoring of operations, collection and use of taxes). The establishment of a Sovereign Wealth Fund and the adoption of fiscal rules to ring-fence investments from proceeds of overtime depletion of natural resources are yet to be finalised. There is an urgent need for public sector capacity building in public investment management, monitoring and evaluation, budget processes, to transform natural wealth into produced capital and other forms of intangible wealth. If the Granger government fails to embrace these policies, it will have profound consequences for this and future generations.
(Trinidad Express, David Renwick, 31.Jul.2018) – The US’s leading oil company, ExxonMobil, continues to make discovery after discovery in its Stabroek block offshore Guyana, the latest being Longtail 1 – its eighth so far. The company says this “creates the potential for additional resource development in the south east area of the block.”
Longtail 1 encountered approximately 256 feet of high-quality oil-bearing sandstone reservoir and was drilled safely to 8,057 feet, in water depth of 6,365 feet.
(Al Jazeera English, 30.Jul.2018) – Oil companies have identified massive offshore reserves in Guyana, one of South America’s poorest nations. New estimates last week report that more than 4 billion barrels of oil could be extracted from a region known as the Stabroek block, where ExxonMobil expects to start pumping crude from in 2020. The country is poised to become a major energy supplier, but not everyone is optimistic about the potential for oil revenue to benefit Guyanese citizens. So what can Guyana do to avoid becoming another poor, yet resource-rich nation?
On this episode of The Stream, we speak with:
— Christopher Ram
Lawyer and newspaper columnist
— Jan Mangal
Former petroleum advisor, President David A. Granger
— Lisa Sachs @CCSI_Columbia
Director, Columbia Center on Sustainable Investment
(Kaieteur News, 30.Jul.2018) — Before any contract is signed with an oil operator, the government should require that it presents and obtains approval for contingency plans in the case of emergency.
According to the Natural Resource Governance Institute (NRGI), these contingencies should include the availability of equipment and expertise to manage accidents, such as oil spills. The Institute said that this should be accompanied by the means to monitor a project throughout its life cycle to ensure that all parties follow the plan and to identify future, unexpected impacts of the project.
As it is impossible to predict all the potential costs, NRGI said that requiring developers to have systems in place to monitor and manage environmental and social impacts on an ongoing basis is just as important as the assessments conducted in project planning.
The Institute opined that the government is responsible for setting and enforcing environmental standards (preferably in compliance with international standards such as the Equator Principles), while the extractive company is usually in the best position to mitigate environmental damage. The international organization said that companies may have only weak incentives to consider the environmental consequences of operations, unless the government makes it a condition of awarding the concession, with penalties attached. As such, NRGI said that the government should ensure that either it or the company sets aside funds for remediation, as the company may leave or sell to another party when projects become unprofitable, which may be long before the official project period ends. It said, too, that independent contractors, acquired on a competitive basis, can be hired to undertake environmental operations such as reclamation.
Further to this, NRGI said, “The security arrangements around projects can give rise to human rights concerns when private or state security forces use excessive force. Operations should include strong safeguards and legal recourse mechanisms in cases of human rights violations.”
NRGI said, “Finally, the government should separately and explicitly identify and factor into the decision-making process the social impact of extraction on vulnerable or marginalized groups of resource extraction since these groups are often omitted from broader community impact consideration.”
(ExxonMobil, 23.Jul.2018 ) – ExxonMobil has increased its estimate of the discovered recoverable resources for the Stabroek Block offshore Guyana to more than 4 billion oil-equivalent barrels and has advanced its evaluation to support a third phase of development and consideration of two additional phases.
The increase follows completion of testing at the Liza-5 appraisal well, a discovery at Ranger, incorporation of the eighth discovery, Longtail, into the Turbot area evaluation and completion of the Pacora discovery evaluation. The previous recoverable resource estimate was 3.2 billion oil-equivalent barrels.
“Outstanding resource quality across these opportunities combined with industry-leading project execution capabilities will provide great value to resource owners, partners and our shareholders,” said Neil Chapman, senior vice president, Exxon Mobil Corporation.
“Continued success in Guyana and progress in other upstream growth projects in the U.S. Permian Basin, Mozambique, Papua New Guinea and Brazil are giving us additional confidence in achieving our long-term earnings growth plans that we outlined in March.”
Guyana’s first development, Liza Phase 1, will use a floating production, storage and offloading (FPSO) vessel to produce 120,000 barrels of oil per day, starting by early 2020. Liza Phase 2, which is targeted for sanctioning by the end of this year, will use an FPSO vessel designed to produce up to 220,000 barrels of oil per day and is expected to be producing by mid-2022.
The Liza-5 well successfully tested the northern portion of the Liza field and, along with the giant Payara field, will support a third phase of development in Guyana. The Payara development will target sanctioning in 2019 and will use an FPSO vessel designed to produce approximately 180,000 barrels of oil per day, as early as 2023.
The Longtail well established the Turbot-Longtail area as a potential development hub for recovery of more than 500 million oil-equivalent barrels. Additional prospects to be drilled in this area could increase this estimate.
The collective discoveries on the Stabroek Block to date have established the potential for up to five FPSOs producing over 750,000 barrels per day by 2025. There is potential for additional production from significant undrilled targets and plans for rapid exploration and appraisal drilling, including at the Ranger discovery.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). ExxonMobil affiliate, 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.
(OilPrice.com, Julianne Geiger, 23.Jul.2018) – Guyana’s recoverable offshore oil reserves are larger than expected—by almost a billion barrels, Hess Corp CEO John Hess said in a Monday press release.
Gross discovered recoverable resources for Hess’s Stabroek Block has been revised upward to 4 million barrels of oil equivalent—up from the previous estimate of 3.2 billion barrels.
“The Stabroek Block is a massive world class resource that keeps getting bigger and better,” CEO John Hess said. “Since the end of 2016, the estimate for recoverable resources on the block has quadrupled and we continue to see multi billion barrels of additional exploration potential on the block. We believe the investment opportunity in Guyana has the potential to be transformative for our company and create significant value for our shareholders for many years to come.”
Hess Corp was trading down on Monday, despite the news.
Guyana has been hailed as the world’s most up and coming oil hotspot, as Exxon, Tullow Oil, and Eco Atlantic made remarkable headway in recent years and months.
Exxon, for one, has had multiple finds in Guyana—also in the Stabroek block.
That Guyana—the small South American country sandwiched between troubled Venezuela and Suriname—has oil, and lots of it, is not new. The United States Geological Survey (USGS) estimated oil reserves in the Guyana-Suriname basin somewhere around 15 billion barrels.
The Stabroek block alone is poised to lift Guyana from the status of one of the poorest countries on the continent to untold riches. Nevertheless, its newfound oil wealth may prove to be a stumbling block for the nation who is used to having next-to-nothing to mismanage.
Earlier estimates pegged oil revenues for Guyana at $700 million per year by the late 2020s just from Exxon’s finds alone.
Hess reported earlier that it did not expect to generate a positive cash flow offshore Guyana until about 2022, according to Oil and Gas Investor.
(UPI, Daniel J. Graeber, 23.Jul.2018) – The size of a reservoir off the coast of Guyana is “massive,” the CEO of Hess Corp. said Monday after a multi-million barrel revision to reserve estimates.
Hess and Exxon Mobil on Monday revised the estimate of recoverable reserves at the Stabroek block off the coast of Guyana from 3.2 billion barrels of oil equivalent to more than 4 billion barrels of oil equivalent.
“The Stabroek block is a massive world class resource that keeps getting bigger and better,” Hess Corp. CEO John Hess said in a statement. “Since the end of 2016, the estimate for recoverable resources on the block has quadrupled and we continue to see multi-billion barrels of additional exploration potential on the block.”
Hess said the revision followed the inclusion of data from new discoveries offshore Guyana and the completion of the fifth appraisal well at the Liza oil field. Dubbed Longtail, the latest discovery made near the giant Liza field could be producing about 500,000 barrels per day by late 2023.
The initial phase of development at Liza was sanctioned in June 2016 and called for the use of a floating production, storage and offloading vessel that will lead to an initial production rate of 120,000 barrels of oil per day.
Phase 2 calls for a second FPSO with a gross production capacity of 220,000 barrels per day and planning is already under way for a third phase of development offshore Guyana.
“The collective discoveries on the Stabroek block to date have established the potential for up to five FPSOs producing over 750,000 barrels per day by 2025,” the statement from Hess read.
Hess in June sold off its joint venture interests in the Appalachian shale basin in eastern Ohio to Ascent Resources for $400 million, using the proceeds in part to fund operations offshore Guyana. The company estimates it would cost at least $3.2 billion to fully develop the broader offshore Liza field.
Consultant group Wood Mackenzie said offshore Guyana is a competitive prospect with a break-even price at about $35 per barrel. Brent, the global benchmark for the price of oil, was trading near $74 per barrel on Monday.
Hess reported a net loss of $106 million in the first quarter, compared with a loss of $324 million in the same period in 2017. The company attributed the improvement to higher crude oil prices and lower operating costs.
Hess releases its second quarter earnings report on Wednesday.
(The New York Times, Clifford Krauss, 20.Jul.2018) – Guyana is a vast, watery wilderness with only three paved highways. There are a few dirt roads between villages that sit on stilts along rivers snaking through the rain forest. Children go to school in dugout canoes, and play naked in the muggy heat.
Hugging the coast are musty clapboard towns like Georgetown, the capital, which seems forgotten by time, honeycombed with canals first built by Dutch settlers and African slaves. The power grid is so unreliable that blackouts are a regular plague in the cities, while in much of the countryside there is no electricity at all.
In the last three years, ExxonMobil has drilled eight gushing discovery wells offshore. With the potential to generate nearly $20 billion in oil revenue annually by the end of the next decade, roughly equivalent to the revenues of the much-larger Colombia, there could be enough bounty to lift the lives of almost every Guyanese.
If all goes well, one of the poorest countries in South America could become one of the wealthiest. Suddenly the talk of Georgetown is a proposed sovereign wealth fund to manage all the money, as if this were a Persian Gulf sheikhdom.
But there are obstacles. If history is any guide, countries that discover oil often waste their opportunity, as the resource blends seamlessly with corruption. Countries with weak political institutions like Guyana are especially vulnerable.
“You have an alignment of money and power in the hands of the state, so the party in power controls the resources,” said Floyd Haynes, a Guyanese-born finance professor who is a consultant to Business Ministry. “And the money is usually squandered, misapplied or downright stolen.’’
Senior government officials here have little experience regulating a big oil industry or negotiating with international companies. The civil service is corrupt, and the private sector is slow to innovate, businessmen and aides to senior officials acknowledge.
Still, there is cautious optimism. “We see this oil discovery as almost like providence,” said Raphael Trotman, the natural resources minister. “We’ve been given a second chance to get things right.”
The first chance was independence from Britain in 1966, and that chance was blown. A plague of ethnic tribal politics has produced a fragile state with an economy propelled by drug trafficking, money-laundering, and gold and diamond smuggling. A vast majority of college-educated youths emigrate to the United States or Canada, while those who stay behind experience high rates of H.I.V. infection, crime and suicide.
Can oil wealth help Guyana overcome its history, or will the windfall that will flood government coffers merely turn the page to a new tragic chapter?
“The challenges are enormous and shouldn’t be underestimated,” said Lars Mangal, president of Totaltec Oilfield Services, a Guyanese company seeking to train local workers in safety and basic oil operations. “We have to overcome nepotism, entitlements, corruption, cynicism and skepticism.”
The Guyanese government, under its agreement with Exxon, will receive roughly half the cash flow from oil production once the company’s costs are repaid. Economists say that will mean the country’s current gross domestic product of $3.6 billion will at least triple in five years.
But with exploration out of sight 120 miles offshore, and no refinery planned, the economic benefits for the population have been limited so far, making some cynical. Only about 600 Guyanese have found direct employment on the drill rigs, shore bases and offices, and that number may increase only to about 1,000, oil executives say.
“When we have big projects, we hire foreign companies who bring their own workers,” said Khemraj Dhaneshrie, a young chemist at the Leonora estate sugar mill.
Mr. Dhaneshrie is typically skeptical about his government’s ability to oversee foreign operations after Guyana’s long experience of opportunistic Chinese investment. He noted that the Chinese financed and built an enormous factory in 2009 to rescue the sugar industry, but it turned out to be a $181 million boondoggle.
“The Chinese cut down our forest, dug out our gold, and we never got a cent,” he said. “We could end up with the same experience with ExxonMobil.’’
In the Past, Wasted Opportunities
Colorful Hindi monuments tower over Guyana’s rice fields, a reminder of the cultural distance between the country and its Latin American neighbors. It is English speaking because of the legacy of British rule, and its two biggest ethnic groups are Afro-Guyanese and Indo-Guyanese — the descendants of slaves from Africa and of indentured servants brought from the Indian subcontinent in the 19th century.
Until now, the country had never produced oil, and traditionally it has traded its rice crop for fuel from Venezuela. Now it is attracting experienced Texas oilmen like Doug McGehee, Exxon’s Guyana operations manager.
Over the last 37 years working for ExxonMobil, Mr. McGehee has taken his black cowboy boots, silver belt buckle and Texas A&M class ring into the oil fields of Angola, Kazakhstan and Equatorial Guinea. In all those places, oil wealth has risen to the top, only to leave the poor behind. Last year, for example, a Paris criminal court convicted the vice president of Equatorial Guinea of money-laundering and embezzling more than $100 million.
But as Mr. McGehee monitored operations aboard the Noble Bob Douglas drill ship on a recent day, he insisted that Guyana could be different.
“The math is right here,” he said, noting that the country has a tiny population — below 800,000 — to share all the new wealth. Guyana’s government stands to take in more than $6 billion in royalties and taxes annually by the end of the 2020s, according to the Norwegian consultancy Rystad Energy.
“If the government manages the resource right, every Guyanese should benefit with better schools, better health facilities, better roads,” Mr. McGehee said.
That is no small “if.”
Guyanese need look no further than neighboring Venezuela to see a failed state where the world’s largest oil reserves have not prevented hunger, shortages of medicine and hyperinflation from producing widespread misery. Nearby Trinidad and Tobago offers another example of how countries dependent on oil can neglect traditional industries and then suffer severe economic shocks when crude and natural gas prices fall.
Others warn of the “Dutch disease,” a phenomenon so labeled in the 1970s after a natural gas boom sapped the strength of manufacturing in the Netherlands. Nations that contract the disease from a sudden influx of mineral money typically suffer a surge of inflation, while labor from farming and other traditional professions is drawn to the higher-paying oil sector. Thus, wealth becomes more concentrated.
There are some examples of countries effectively using oil to reduce poverty. Malaysia, with large offshore oil production, has kept its economy diversified and growing. In the Middle East, Oman is a model for using oil and gas wealth to modernize its economy.
But dispiriting examples of wasted opportunity abound.
“We’re all concerned about the negatives,” Prime Minister Moses V. Nagamootoo said.
Dawn Chung Layne, who operates a sewing business out of her mother-in-law’s concrete house in Georgetown, is also anxious. She is attending workshops at the Center for Local Business Development, a program financed by Exxon, to learn ways she can benefit from the oil economy. She hopes to make curtains and linen for cafeterias on the oil ships, and uniforms for sports teams established by foreign companies and their families.
But she also sees risks in these new ventures. More affluent Guyanese may turn away from the sports uniforms she already makes to buy name brands like Nike and Adidas, she said, and she is concerned that food prices will rise.
“Check out the Trinidad economy,” she said. “They thought oil was the best thing since sliced bread, and they spent Sunday to Sunday. They stopped producing and imported everything with oil money. It could happen here.”
‘This Could Be Game Changing’
Before the recent breakthrough, various oil companies had drilled more than 40 wells off Guyana and neighboring Suriname since the 1960s. All were dry holes or otherwise not economically promising. But as oil prices rose a few years ago, Exxon and Royal Dutch Shell decided to take another look. (Shell eventually dropped out of the partnership.)
Exxon’s top geoscientist on the scene was Kerry Moreland, an Oklahoman whose family has been in oil for three generations. Ms. Moreland toyed with becoming a professional bowler and had interned as a tornado chaser for a Tulsa television station before going to work for Exxon and traveling the world in search of new fields. She pinpointed on the map where the first deepwater well, named Liza-1, should be drilled.
Recalling the day three years ago when she decided to duck out of some business meetings in Georgetown to visit the drilling platform, she said there was no more than a 20 percent chance that a meaningful amount of oil would burst out from three miles below the ocean bottom.
As luck would have it, just as her helicopter landed on the platform, the drill bit penetrated the oil reservoir. She went to the control room as the first data from the wells showed promising signs of hydrocarbons. When rock fragments came to the surface a few hours later, they were dripping with oil.
“At that moment, it was ‘Oh, my God, we’ve made a discovery,’” Ms. Moreland said. “You have to pinch yourself and ask, ‘Is this really happening?’ And it hit right then, this could be game changing for the country, one of the poorest countries in the Western Hemisphere. It was a dream come true for any geologist.’’
Exxon is known in the industry as a slow-moving, stodgy company, but Ms. Moreland’s enthusiasm caught fire through the executive wing in the Texas headquarters known as the God Pod. Within three months, the company sent two vessels to conduct the largest three-dimensional seismic test that Exxon had ever undertaken, over 6,500 square miles, in search of more oil.
There’s a lot at stake for Exxon in Guyana.
In recent years, its stock price has slumped because of disappointing production and depleting reserves. The company invested heavily in Canadian oil sands and in natural gas when prices were high, bets that have not worked out as well as expected. While the company was forced to write off large assets in Canada, Western sanctions on Russia foiled its plans to drill in the Russian Arctic.
Darren Woods, the company’s chief executive, has a plan to reverse company fortunes, and Guyana is a big part of it.
Leading a consortium that includes Hess and the China National Offshore Oil Corporation, Exxon is making an effort here that is nothing if not ambitious. Within three years of its big first discovery, it has begun drilling the first of 17 wells that will start yielding oil in 2020, with a floating production, storage and offloading vessel able to handle 120,000 barrels a day. And that is just the first phase.
Another floating vessel, with a capacity of 220,000 barrels a day, is planned, and a third vessel is being considered. In all, 500,000 barrels a day could be produced by sometime in the next decade — the equivalent of Ecuador’s national output. (Repsol of Spain, Tullow Oil of Britain and other companies are exploring, too.)
“It’s a growth area for us,” said Mr. McGehee, the Exxon operations manager. “We keep finding oil.”
That produces nothing but excitement for the 60 Guyanese workers on the Noble Bob Douglas drill ship, who have typically seen their incomes soar.
Gorshum Inniss, a 25-year-old roustabout with an easy smile and flashing dark eyes, is working on a crane crew lifting casing pipe for new wells, doubling what he earned working on a tugboat. He said he now had enough money to visit his parents and younger brother in New York and planned to build a house for him and his daughter.
“I’m proud to be one of the pioneers in this big moment for Guyana,” he said. “I see Guyana as the new Middle East.”
An Endangered Beach?
Not far from the turbulent Venezuelan border, there is a quiet stretch of coastline, pounded by surf, known as Shell Beach because its sand is made of tiny crushed seashells that make it feel like sawdust. Several endangered species of turtles come to nest at night. Once hunted for food, they are jealously guarded from poachers by residents who make a living fishing and selling coconuts.
Audley James, a former turtle hunter who makes necklaces out of beads and coconut shells, remembers when Trinidadian environmental consultants representing Repsol came six years ago to give two days of spill-response training.
The Trinidadians taught the residents how to lay temporary floating barriers to protect the beach from an oil spill, and gave them training certificates that look like diplomas. But there has been no further training that might prepare them for what is now a much less theoretical hazard.
“Plenty of us don’t understand what is going on,” Mr. James said.
Environmentalists are worried that oil will forestall development of renewable energy and that the government and oil companies are not fully prepared to prevent a possible spill.
“It’s two years before first oil, and we don’t have a national oil spill contingency plan,” said Annette Arjoon-Martins, president of the Guyana Marine Conservation Society. “We have our hands in the mouth of a jaguar.”
Ms. Arjoon-Martins said the government’s agreement with Exxon did not specify in enough detail the company’s responsibilities in case of a spill. Government officials disagreed, saying the country’s laws would hold the company fully liable.
Exxon executives say the company is doing everything possible to minimize the dangers of a spill disaster. The company has skimmers and oil booms on hand to collect errant oil, and it has applied to the government to use chemical dispersants in an emergency to break up any spilled oil. They say Guyana is close enough to the Gulf of Mexico to bring in plenty of help in an emergency.
The company has agreed to map the coastal mangroves and study the area’s fish, bird and turtle migration routes to set priorities in case a cleanup is ever needed, executives said. And in another potential environmental benefit, the company is planning to build a natural-gas pipeline to shore that will replace the heavy fuel oil burned for the country’s power plants, lowering costs to consumers and businesses.
“We are committed to develop these resources in the most responsible way with a minimal impact on the environment,” said Rod Henson, Exxon’s Guyana manager. “We stand by our operations, and in the unlikely event of an incident, we will absolutely respond immediately and we will fully take care of our responsibilities.”
Local oil executives say one obstacle to overcome is a lackadaisical attitude toward safety among Guyanese workers, who frequently arrive at their construction and wharf jobs in flip-flops and sometimes use their hard hats as soup bowls. That is something Exxon and other companies are working to change with courses and other training that teach workers to be careful, not only for their own safety but also to safeguard the fragile marine environment.
At a recent daily meeting of the crew of the Noble Bob Douglas to review environmental and safety precautions, Mr. Inniss, the roustabout, was given a chance to make his own safety presentation. He told of a serious accident he had a couple of years ago working on his motorcycle when he neglectfully left the motor running while adjusting a chain. He lost three fingertips.
“Use your heads before you use your hands,” he told the room full of Guyanese and American workers. He got an ovation and smiled proudly.
‘I See a Lot of Red Flags’
To visit the most senior oil regulator in Georgetown, one needs to climb an exterior staircase of warped wood that could sorely use a fresh coat of paint.
At the top is the tiny office of Newell Dennison, the acting head of the Guyana Geology and Mines Commission, whose desk is stacked high with folders beside a single metal filing cabinet. His office is spare of decorations, aside from two bouquets of artificial tropical flowers.
Mr. Dennison has a computer by his desk, from which he could consult data gathered by Exxon drill ships, though he said he had yet to do so. “We’re in transition,” he explained. “It’s a challenge.’’
For all the international attention that Guyana’s oil bonanza is beginning to generate, Mr. Dennison and the Department of Natural Resources have a mere nine technically trained people responsible for regulating oil production, engineering and geological research.
“You would expect we would have a problem to have 100 percent monitoring with our lack of resources,” said Mr. Dennison, a middle-aged geologist with horn-rimmed glasses and a neatly trimmed goatee. “My commission cannot be all of a sudden everything people expect us to be.”
There are a few signs of progress.
Guyana’s president, David A. Granger, a retired military commander leading a fractious coalition, has tried to establish a legal framework for the coming bonanza. To bypass corrupt officials, Mr. Granger has announced his intention to form an energy department for policymaking, responsible to the president, and an independent petroleum commission to regulate the industry and grant exploration and production licenses.
Under pressure to break with past secretive deals with international companies, Mr. Granger published Guyana’s contract with Exxon on a government website in December, opening a vigorous public debate on its terms. He has promised to end closed-door bidding for drilling rights, and to open auctions for future development.
Many of the changes have been promoted by Jan Mangal, Mr. Granger’s personal petroleum adviser and brother of Lars Mangal, the businessman. Jan Mangal, a Guyanese-born former Chevron project manager, has advised the president to put a hold on new leasing until the petroleum commission can be established with new personnel and has called for an investigation of several oil-exploration concessions made by the previous government to small oil companies.
“I see a lot of red flags,” said Mr. Mangal, who shuttles between Guyana and his home in Houston. “We cannot allow the Guyanese industry to be built around this shabby foundation of corruption.”
There are other signs of trouble.
Foreign development bank advisers have told the government that legislation to create a sovereign wealth fund to invest the royalties and taxes coming to the government lacks sufficient regulatory controls to avert corruption. The legislation is now in limbo. Mr. Granger’s energy department has not gotten off the ground, and a bill to set up the petroleum commission is stuck in the National Assembly.
That leaves Mr. Dennison and his commission in charge of regulation. He said he and everyone in the government felt pressure to get things right.
“Of course I worry,” Mr. Dennison said.
Clifford Krauss is a national energy business correspondent based in Houston. He joined The Times in 1990 and has been the bureau chief in Buenos Aires and Toronto. He is author of “Inside Central America: Its People, Politics, and History.” @ckrausss
(Stabroek News, 18.Jul.2018) – Approximately 35 Guyanese Pritchard-Gordon Tankers (PGT) workers were educated on safety practices as Shell partnered with the company to host a one-day workshop yesterday.
The workshop was hosted at the Pegasus Hotel, where the workers were taken through the rounds by PGT’s Nick Griffith.
“My main focus for this seminar is to improve safety on board of our ships; not that we have a poor safety record but there are always ways of improving safety on board and it has been proven that little incidents, little triggers can show that there’s underperformance and if we have a lot of small and minor incidents then it’s possible that they can result in larger accidents which we definitely want to avoid,” Griffith told Stabroek News.
He stressed that they have not had any serious incidents in a long time but there have been recurrences of minor ones.
According to the company’s website, PGT “specialises in ocean transportation of crude oil and refined petroleum products in environmentally sensitive areas, using purpose built, shallow draft, double hull tankers.”
Griffith said that he hopes that the workers will be even more equipped than they already are to take the necessary safety precautions when they are working and to ensure that they spread the word to the other workers for a more holistic improvement.
He explained that the main topic of yesterday’s seminar was mooring, which he said is a quite dangerous operation.
“You’re using a lot of ropes under pressure and strain and those ropes, if used incorrectly, can break and the rope will snap and it will whiplash and if that rope hits a person’s leg they could lose it. If it hits them around a vital organ they can ultimately die or fall over and bang their head and it has been seen in the past that mooring is a very dangerous operation,” he said.
(Energy Analytics Institute, Ian Silverman, 12.Jul.2018) – Foreign Direct Investment (FDI) in Latin America and the Caribbean fell for a third straight year in 2017, reported the Economic Commission for Latin America and the Caribbean or CEPAL by its Spanish acronym.
(OilPrice.com, Meredith Taylor, 10.Jul.2018) – American energy dominance is on the rise.
In March 2018, the U.S. beat its all-time record and pumped more than 10.4 million barrels per day (bpd). Energy stocks are way up on strong forecasts of future demand. Mentioned in today’s commentary includes: Exxon-Mobil Corp. (NYSE:XOM), Chevron Corp. (NYSE:CVX), Pioneer Natural Resources (NYSE:PXD), Marathon Oil (NYSE:MRO), PDC Energy, Inc (NASDAQ:PDCE).
A tight market is looming, regardless of OPEC’s plans to pump more: outages are expected in multiple areas, offering up opportunities for American energy producers to swoop in. The last few years have seen the U.S. emerge as an energy powerhouse. And this is just the beginning.
Here is the best stock with (Guyana exposure) to watch in the space:
The biggest of the American super-majors is going back to its roots. Exxon-Mobil, an industry giant with a market cap of $351.8 billion, has its hands in upstream, midstream and downstream. It’s truly international, with operations and investments all over the world.
But increasingly, it’s looking to the U.S. to cover its bottom-line. Both NGL and crude production from Exxon’s U.S. properties have increased since 2013. In January, the company announced it would invest $35 billion in the U.S., in response to the generous tax cuts it received.
As other supermajors diversify and turn towards renewables and natural gas, Exxon is determined to remain a crude player-even if that has caused it to lose its market lead over Shell, narrowing the gap between the two firms to a mere $55 billion, according to Bloomberg. And even as it looks to the U.S., particularly the Permian Basin where it holds 6 billion barrels of oil equivalent (BOE), Exxon’s international posture has grown more sturdy-it’s adding to an already-impressive find off the coast of Guyana.
Exxon stock has risen steadily since the doldrums of February 2018, and the news from Guyana (as well as positive news from the OPEC conference in Vienna) should send it even higher. It always pays to bet on the biggest players. And they don’t come any bigger than this.
(Stabroek News, Marcelle Thomas, 8.Jul.2018) – Facing questions from a parliamentary committee, ExxonMobil yesterday denied that it was funding any political party or political initiatives in Guyana.
A meeting between the Parliamentary Sectoral Committee on Natural Resources and the US oil giant became testy when allegations of possible funding of political initiatives were put to the company by opposition members.
In the Parliament Chamber, ExxonMobil quickly shot down suggestions that it was funding any initiative of the A Partnership for National Unity and Alliance for Change (APNU+AFC) coalition, saying that the company was not politically aligned.
Opposition members of the committee also raised questions about ExxonMobil’s funding of international environmental body, Conservation International (CI), stating that this was a clear conflict of interest for the latter.
Last evening, in response to questions from Stabroek News, Conservation International rejected the assertions by the parliamentary committee members, stating that notwithstanding the funding, the organisation will remain objective and impartial.
“As a science-based organization with over two decades of conservation success in Guyana, Conservation International is in a unique position to help Guyana achieve its green development goals. We carefully deliberated and determined that this effort will achieve its goals while also maintaining our independence and objectivity,” Global representative Salma Balramy said in response to the questions from this newspaper.
“We’ve worked with Guyana’s government and people in over 50 communities to help protect nearly three million acres of indigenous lands while improving livelihoods. As long-time partners of Guyana’s commitment to its people and ecosystems, Conservation International is confident this is a necessary step at this critical time in Guyana’s development,” she added.
Government representative on the committee Ronald Bulkan also rebuffed the line of questioning by the opposition MPs, lamenting that it was “a shame” that the meeting had descended to allegations against the company and CI, and members did not use the opportunity to grill the company on how Guyana’s citizenry were benefiting from its presence and works here.
“Sorry ma’am, I have to stop you. ExxonMobil is not involved with politics in Guyana. We don’t choose sides, we’re apolitical. We’re not funding any political party, any political side, any political initiatives, none, just full stop,” ExxonMobil’s Country Director Rod Henson said as he interrupted People’s Progressive Party/Civic (PPP/C) member Pauline Sukhai during her questioning about political funding here by the company.
ExxonMobil, according to a letter dispatched to it by the committee, was to “provide an update” on the “company’s operations and answer questions of concern to members.”
But while Henson had replied saying that he “welcomed the opportunity…to provide an update on EEPGL’s (ExxonMobil’s subsidiary) operations,” he explained yesterday that the communication was bungled as he believed that he would only be updating on the local content aspect of EEPGL’s operations and thus only came prepared to deal with that subject.
Nonetheless, he said that he would answer questions outside of his prepared subject as best as he could but provided no answers on who initiated the controversial US$18 million signing bonus between EEPGL and the government or what were short and long-term cost projections of work by his company.
Present at yesterday’s meeting were committee Chairman Odinga Lumumba and fellow opposition PPP/C MPs Neil Kumar, Pauline Sukhai and Yvonne Pearson. For the government side, Audwin Rutherford, Jermaine Figueira and Bulkan were present. The Committee was informed that Minister of Finance Winston Jordan was out of the country and Minister of State Joseph Harmon was meeting with residents in the flooded areas of Region Nine.
Henson made a presentation on general operations of the company, with a focus on local content, where he echoed earlier positions of tempering expectations that the footprint for many direct related oil and gas jobs would be met. He said again that there is only room for a few hundred direct jobs.
Highlights and highpoints were given as Henson also declared that for the first quarter of this year the company paid out US$21 million for products and services from which 227 Guyanese companies benefitted.
Then came the question and answer segment of the hearing, which focused heavily on local content and the grant given to CI.
Sukhai said that she was concerned about word in the public that the company was helping to fund government’s Green State Development Strategy (GSDS) though its partnership with CI.
Earlier this week, the philanthropic arm of ExxonMobil, the ExxonMobil Foundation, announced US$10 million ($2 billion) in funding for CI and the University of Guyana to train Guyanese for sustainable job openings and to expand community-supported conservation.
A statement from the Foundation had said that the investment is also aimed at supporting Guyana’s Green State Development Plan, the country’s 15-year development plan that, among other things, intends to diversify Guyana’s economy and balance economic growth with sustainable management and conservation of the country’s ecosystems.
This was pounced upon by Sukhai.
“The Green State Development Strategy is not in its totality or comprehensively documented and consulted upon as yet. In fact, that strategy has not even reached the Parliament for its debate or for its approval or to be laid as government’s main focal point strategy. There is a line of thought out in the public that ExxonMobil is actually funding a political initiative that is not yet established and approved by the National Assembly and that is, as I mentioned before, the Green State Development Strategy,” Sukhai said before she was quickly stopped by Henson from going further.
“I would like to say that there are concerns out there, which is speaking to the fact –two lines of thought and two lines of criticism-and that is CI is an international NGO and CI is considered to be an international watchdog on environment, nature and all the things that go with conservation, preservation of our environment and so on. Don’t you think that CI being a grantee of ten million US dollars is actually in a conflict of interest because they should be monitoring?” she nevertheless pressed.
She said that that while Henson may want to stop her questions, answers were needed as, “we have to stop the concern in the public domain, because that is what is circulating and that’s why I chose to raise it here with you, so you can have a chance to clarify.”
A seemingly shocked and perturbed Henson replied, “I can’t control every individual’s thoughts and opinions, but I appreciate your opportunity to allow me to say that’s complete hogwash.”
Henson would later be asked by the Chairman to withdraw the “hogwash” remark and he did but he stressed that he still wanted to dissuade any views that his company was political.
Further probing came from Chairman Lumumba, who wanted to know if when ExxonMobil signed the agreement with CI, whether “there was government input or government approval” and why the company does not see its funding as a conflict given CI’s watchdog role here.
“This is our ExxonMobil initiative. This was not directed by the government. This is a good thing. ExxonMobil partners with this organisation around the world. It is not just Conservation International, this is an excellent partnership with the University of Guyana,” Henson said.
“Chair, I think Conservation International would disagree with you and I disagree with you, respectfully. I don’t think this impedes Conservation International’s role in anyway in the country. We made the government aware but again this is an ExxonMobil initiative, something we chose to do,” he added.
Questions were also posited by Sukhai and Kumar on if ExxonMobil had a role in the recent announcement that 100 sugar workers were getting skills training though a programme with the Ministry of Natural Resources.
“Is Exxon funding any of that training?” Sukhai asked, to which Henson replied, “No, we are not funding that.”
Questions were asked about the 227 companies which ExxonMobil said benefited in the first quarter and the Chairman asked for the list and services provided to be made available to the Committee so that it could be analysed to determine if the country was getting value for money. He pointed out also that since the list was publicly released there had been many criticisms and questions linger on if the list met the definition of what local content should be.
A puzzled Henson said that he had given the list to government and questioned if the bipartisan committee was not part of government. “Aren’t you the government?” Henson asked, to which Lumumba replied “No, we are the opposition.” The ExxonMobil head said that he was prepared to go over the list with the committee if it desired.
Kumar also spoke of sugar workers being “on the breadline” and of “closed sugar estates” and wanted to also know if the company was helping government with legislation crafting as it pertained to local content. Henson said that the Guyana was a sovereign country and the company had no role in how its government spends money and could not be a part of law crafting.
Bulkan zoomed in on the opposition’s posture and told the Chairman that it was regrettable that the meeting yesterday seemed to stray from the focus of ExxonMobil’s operations.
“I would like to take strong objection to the [statement that the] government in one instance has placed persons on the breadline and that the government has closed sugar estates. I think we are in danger of being sidetracked from the purpose of this meeting,” Bulkan said.
“We have also heard, and I think it is it is regrettable, that the GSDS, as initiated by this administration, is political. It is not a political initiative, it is a government initiative and I think it is unfair for us to come and say here that it is not fully developed and to suggest that the activities of the company’s funding to CI, to suggest it has an impact on the GSDS. I think it is unhelpful…,” he added.
Following the meeting, Henson told reporters that it was his error about the meeting’s overall focus as he came only to deal with local content. He said he welcomed the opportunity to talk and would take up another invite if extended.
(Energy Analytics Institute, Pietro D. Pitts, 8.Jul.2018) – Recent success in Guyana’s oil sector could be a wolf in sheep’s clothing.
Guyana doesn’t yet produce oil but in coming years its oil output is expected to surpass that of Peru and Trinidad and Tobago and could approach that of Ecuador, one of two lone OPEC producing countries in South America.
Having the world’s largest oil reserves, the first LNG export terminal in the Americas, or large gas reserves doesn’t mean all a country’s political, economic and social problems will be solved. Just ask Venezuela, Trinidad and Tobago, and Bolivia, respectively. Case studies of these three countries have shown that not just countries in Africa, such as Nigeria, are vulnerable to the Dutch Disease even in the 21st Century.
A look just at Guyana’s poor Corruption Perceptions Index ranking from Transparency International, much lower than the average for the Americas indicates the government is failing in efforts to tackle corruption.
It is hardly likely that Guyana’s faith will change by 2020 when the oil starts flowing and revenues start to climb. What will happen then is almost predictable unless a miracle happens between now and then.
(Energy Analytics Institute, Piero Stewart, 6.Jul.2018) – Oil production will begin in 2020, and the boom in investment beforehand will continue to drive activity, writes Caribbean Economist Marla Dukharan in her “Caribbean Monthly Economic Report.”
Guyana, located in the northeastern region of South America, is readying for an oil boom to come soon from commercialization of recent oil discoveries. Exxon Mobil and partners have to date found recoverable resources estimated at more than 3.2 billion oil-equivalent barrels on the Stabroek Block offshore Guyana. Three of ExxonMobil’s developments will produce more than 500,000 barrels per day, and initial oil flows are slated for 2020.
The economist also said Guyana’s reserves, which amounted to $507 million in April 2018, where down $77 million or 13% compared to December 2017.
“The IMF revised its growth estimate for 2017 down to 2.1% from 3.5%. Growth is then expected to ramp up to 3.5% in 2018, 3.7% in 2019, and with the impact of oil production, 27.8% by 2023. Nope this is not a typo,” wrote Dukharan in her July report.
(Stabroek News, 3.Jun.2018) – The creation of a National Oil Company (NOC) will be “a disaster” for this country warns former Government Advisor on Petroleum, Dr. Jan Mangal who says that Guyana should learn from the experiences of sister Caribbean countries, Trinidad and Tobago and Jamaica.
However, the government says that it has been advised by a number of international organizations, including Chatham House of the UK, that a NOC would be beneficial to this country.
“Here we go again with national oil companies in the Caribbean. Both Petrotrin (Trinidad) and Petrojam (Jamaica) are in the news because of corruption,” Mangal said as he urged Guyanese to not support a call for the establishment of one here.
“Guyanese: Please remember these two nations have much larger and better run economies than ours, and much stronger institutions. Hence imagine what will happen in Guyana, with our weaker capacity, if elements in our government and their private sector cohorts are allowed to create a national oil company with access to our oil. It will be a disaster,” he added, pointing to recent scandals in Jamaica and neighbouring Trinidad and Tobago.
Recently, Jamaica’s Petrojam, which supplies a range of domestic, transportation and industrial petroleum products in that country, was hit with a number of allegations of corruption and victimisation. It saw questions surrounding the use of public funds snowballing in recent weeks during which there has been an outcry for Prime Minister Andrew Holness to act, the Jamaica Gleaner newspaper has reported.
Over in Trinidad and Tobago, a forensic audit report by the Canada-based Kroll Consulting Canada found that the state-owned Petrotrin paid a company, A&V, for oil produced between January and June of 2017, which it did not receive. In September, Petrotrin announced that it had launched an investigation into the reports of inconsistencies in the volumes reported from its exploration and production fields.
Mangal, whose contract as an Advisor to President David Granger ended in March of this year, has said that he will, “Outline the mechanism used by some oil companies and their local friends (in government and in the private sector) to defraud needy people in countries around the world, like in Guyana.”
But government says that although the establishment of a NOC is not in its immediate plans, there will be one formed sometime in the future and that it has been advised by several international organizations that it was the way to go.
“Government has been advised by several international organizations, foremost amongst which is Chatham House though Dr. Valerie Marcel, that the NOC is the direction we would be headed. We believe we will get there one day but it is not a matter that is on our list of immediate,” Minister of Natural Resources Raphael Trotman told Stabroek News when contacted.
Further, he added, “The rationale for a NOC is always that countries get a greater share of the revenue and at the same time gain valuable experience. We are keeping the idea alive but there is no discussion when.”
Other experts have also said that they believe that an NOC, if properly equipped with needed regulations and insulated from politics, would serve beneficially to the people of Guyana.
“State controlled oil major, is an absolute must! And the sooner, the better. NOCs control approximately 75% of the world’s oil market and 90% of the world’s oil reserves, evidence that having NOCs have become a normalcy. The advantages of an NOC are unlimited. In recent years, NOCs have developed global reach and influence,” a former United States Department of Energy Manager, Dr. Vincent Adams had told this newspaper, in an interview earlier this year.
“With the proper contract arrangement with the NOC representing the Government’s interest, the arrangement allows for personnel from the NOC working alongside their IOC counterparts and `learning by doing’, ultimately acquiring the ability to operate both within its own jurisdiction and abroad; thus, bringing revenues back to their home countries,” he added.
Most significantly, Adams believes, is that NOCs provide a vehicle for state participation and the ability to drive greater local content and capacity building in terms of directing the purchase of local goods and services. “The lessons learned from bauxite was that we were not ready for nationalization, since we failed to build the capacity to manage on our own upon nationalization. An NOC will give us that capability and strengthen our position in negotiations,” he asserted.
Using his country’s experience as a model, former Minister of Energy of Trinidad and Tobago, Kevin Ramnarine had also this year advised on an NOC but stressed that it must be insulated from political interference.
“This company’s board and management must be insulated from politics as is the case with Statoil (Norway) because if it is not, you will get a call to hire somebody’s nephew,” Ramnarine said.
“I would recommend that whatever state companies you form, it doesn’t have to be all, put part of the equity on the stock exchange,” he added.
He pointed to Norway’s Statoil and Russia’s Gazprom among other companies saying that Guyana can earn needed revenue through the establishment of such companies.
Pointing to the detriment of a state company influenced by politicians, as witnessed in his home country, he emphasized that before such a decision be taken here the companies must be removed from politics. “There is also the whole issue of political influence in state enterprises in Trinidad. When we look at the Norwegian company Statoil, their Board of Directors are independent, and for example the workers of Statoil get to vote on who should be a director…you begin to dilute the political influence in the company,” he posited.
The former People’s Partnership Energy Minister recommended that Guyana set up three state-owned companies. “I am going to recommend that Guyana sets up three state enterprises, one to participate in the upstream, alongside with companies like Exxon, one to focus on infrastructural development and one to focus on marketing of products… our new production-sharing contracts in Trinidad allow the ministry to market their own hydrocarbons,” he said.
(NewEnergyEvents, 3.Jul.2018) – The Government of Guyana has secured a deal with Japan for US$17.8M dedicated to renewable energy development and system efficiency improvements. This grant will also provide US$1.3M for energy saving LED lights, which are expected to fund 10,930 units of LED streetlights.
This investment will be used to improve the efficiency of the power system in Georgetown and surrounding areas. This will be achieved by enhancing distribution and supply equipment. The grant will also establish a photovoltaic and an energy management system at the CARICOM Secretariat.
(AIPN, 27.Jun.2018) – Petroleum consultants and other energy sector experts will discuss the challenges and opportunities in Trinidad & Tobago, Guyana and Suriname during a discussion in London.
The select group will consist of Kevin Ramnarine, former Trinidad & Tobago Energy Minister (2014-15); Energy Strategic Advisor and Lecturer Carlos Bellorin, Principal Consultant, IHS Markit; Lecturer, Queen Mary University and SciencesPo Ekpen Omondude, former Senior Economic Adviser, The Commonwealth Secretariat (2008-2018); Director, Bargate Advisory Limited.
With the discovery of Liza-1 within the Stabroek Block by ExxonMobil and its partners in 2015 – and after years of frustrating exploratory results – all eyes have been on the Southern Caribbean. After Liza-1 and the seven discoveries that followed (including Longtail-1 announced on 20 June 2018), the Guyana-Suriname Basin has all but confirmed its massive potential. On neighbouring sides of Guyana, the E&P outlook has also changed after 2015.
To the east in Trinidad & Tobago – one of the more mature producers in the region – successive governments have tried to bring the island’s hydrocarbons industry to the attention of investors with limited success. Without any significant recent discoveries, Trinidad & Tobago will need to improve its performance and hydrocarbons regime. This will be necessary to replace reserves and increase production if it is to maintain its gas-linked economy and leadership as a gas producer.
To the west lies Suriname. After recent wells have come up dry, it needs (at least) a commercial discovery to finally confirm its long-coveted potential. Venezuela also plays a pivotal role in regards these two, smaller, nations: an embattled Venezuela is currently engaged in a high-profile boundary dispute with Guyana and could enter into a strategic partnership with Trinidad & Tobago over two key gas fields.
During this session, we will touch on the most critical issues from these three countries, including comments on their legal-fiscal regimes and political risk while looking forward to their challenges and opportunities. We will offer an on-the-ground view of one the hottest new deepwater provinces in the world.
WHEN: Thursday, June 28, 2018 (5pm – 8:30pm Europe/London)
COORDINATOR: Akin Gump
VENUE: Bishops Square
WHERE: London E1 6EG United Kingdom
Registration will be from 5:00 – 5:30 p.m., followed by the presentations and Q&A until 7:00 p.m. A networking reception with drinks and canapes will follow from 7:00 – 8:30 p.m.
Online registration has been closed. On-site registration will be on a space available basis and is complimentary for all members and non-members. If you have any questions, please contact Carlos Bellorin at Carlos.Bellorin@ihsmarkit.com
(Energy Analytics Institute, Piero Stewart, 22.Jun.2018) – US-based ExxonMobil Corporation and partners continue to invest in small-to-medium sized enterprises in Guyana.
Irving, Texas-based ExxonMobil and project partners spent $24 million with more than 300 local suppliers in 2017 and opened the Centre for Local Business Development in the capital city of Georgetown to promote the establishment and growth of small- and medium-sized local businesses, the oil giant announced in an official statement.
Guyanese businesses, contractors and employees continue to play an important role in ExxonMobil’s operations in the country. ExxonMobil’s priorities in Guyana are focused on enabling local workforce and supplier development and collaborating with government to support the growth and success of its economy, both in the energy and non-energy sectors.
(Energy Analytics Institute, Piero Stewart, 20.Jun.2018) – Irving, Texas-based Exxon Mobil Corporation’s good luck continues in Guyana.
The oil giant announced it has made its eighth oil discovery offshore Guyana at the Longtail-1 well, creating the potential for additional resource development in the southeast area of the Stabroek Block, Exxon announced in an official statement.
ExxonMobil encountered approximately 256 feet (78 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,057 feet (5,504 meters) depth in 6,365 feet (1,940 meters) of water. The Stena Carron drillship commenced drilling on May 25, 2018.
“The Longtail discovery is in close proximity to the Turbot discovery southeast of the Liza field,” said ExxonMobil Exploration Company President Steve Greenlee, in the company statement. “Longtail drilling results are under evaluation. However, the combined estimated recoverable resources of Turbot and Longtail will exceed 500 million barrels of oil equivalent, and will contribute to the evaluation of development options in this eastern portion of the block.”
Second Exploration Vessel
ExxonMobil is currently making plans to add a second exploration vessel offshore Guyana in addition to the Stena Carron drillship, bringing its total number of drillships on the Stabroek Block to three. The new vessel will operate in parallel to the Stena Carron to explore the block’s numerous high-value prospects.
The Noble Bob Douglas is completing initial stages of development drilling for Liza Phase 1, for which ExxonMobil announced a funding decision in 2017. Phase 1 will consist of 17 wells connected to a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels per day (b/d) of oil. First oil is expected in early 2020. Phase 2 concepts are similar to Phase 1 and involve a second FPSO with production capacity of 220,000 b/d. A third development, Payara, is planned to follow Liza Phase 2, according to ExxonMobil
The Stabroek Block is 6.6 million acres (26,800 square kilometers). Partners in the Stabroek Block include ExxonMobil affiliate Esso Exploration and Production Guyana Limited (Operator, WI 45%. Hess Guyana Exploration Ltd. (WI 30%) and CNOOC Nexen Petroleum Guyana Limited (WI 25%).
(Denis Chabrol, DemeraraWaves, 12.Jun.2018) – ExxonMobil on Tuesday reconfirmed that Guyana will pump up its first barrel of oil in March 2020, even as the Guyana government continued to fend off criticisms of the 2016 production sharing agreement.
Vice President of ExxonMobil Development Company, Lisa Walters said work was well advanced by several companies in Singapore, Brazil and the United States Gulf Coast to ensure that commercial oil production begins in less than two years. “We are on track for first oil in March of 2020,” she said. “In just a little over a year and a half, the Liza Destiny will deliver its first oil to its first tanker offshore,” she added.
ExxonMobil estimates that oil discoveries at Liza, Payara, Snoek and Turbot offshore Guyana total 3.2 billion barrels and would eventually lead to daily production of 500,000 barrels. ExxonMobil estimates that Liza Phase 1 will generate over US$7 billion in royalty and profit oil revenues for Guyana over the life of the project.
Walters said the drill-ship, Noble Bob Douglas, recently started drilling the production wells located at Liza more than 125 miles off the Demerara Coast. She said “all of the design work on the project is nearing completion” and “construction is well-underway worldwide” for the Floating Storage, Production, Storage and Offloading (FPSO) vessel named “Liza Destiny”. SBM Offshore has won the contract to construct that vessel, while TechnicFMC, and Saipem have been hired for sub-sea construction of the umbilical cords and flow-lines. Guyana Shorebase Inc was awarded the contract in June, 2017 for shore-base services and in August, 2017 the Noble Bob Douglas was hired for drilling services.
ExxonMobil’s Country Manager, Rod Henson also used the opportunity of the official start of the Liza Phase 1 Development Programme to show off that in the first quarter of 2018, over US$14 million were spent with Guyanese suppliers; together with its contractors ExxonMobil utilized 262 Guyanese registered suppliers, 227 of which are Guyanese owned.
Minister of Natural Resources, Raphael Trotman reiterated that the revised ExxonMobil Production Sharing Agreement has “the same or very similar contractual terms” as those Guyana has signed with other companies such as Anadarko Petroleum, Ratio, CGX, REPSOL, Ratio, Eco-Atlantic and Mid Atlantic.
“In that regard, they will enjoy the same rights and obligations as every other company that has been contracted by the government to explore and develop our hydrocarbons.
That they were the first to find a large deposit should no redefine their contractual terms or place them in any position less than that enjoyed prior to discovery. For government to do otherwise is not how responsible or how well-organised and governed States function,” she said.
The Minister of Natural Resources said the proceeds of Guyana’s oil production would be fairly shared among all Guyanese without discrimination as part of a process that would eventually lead to the removal of negative labels such as Third World, backwards, underdeveloped and developing from Guyana. “With the blessings that have been revealed, and are within our grasp, we purpose to develop a modern, peaceful and cohesive State-one in which every man, woman and child, without exception, reservation, and/or discrimination of any kind, is able to enjoy the full and equal benefits of the bounty we are about to be bestowed,” he said.
(ExxonMobil, 12.Jun.2018) – The Liza Phase 1 development continues to rapidly progress, with the commencement of development drilling offshore Guyana, ExxonMobil said.
Development drilling began in May for the first of 17 wells planned for Phase 1, laying the foundation for production startup in 2020. The company and its co-venturers have so far discovered estimated recoverable resources of more than 3.2 billion oil-equivalent barrels on the Stabroek Block.
“The work our teams have done in Guyana is remarkable,” said Liam Mallon, president of ExxonMobil Development Company. “We are well on our way to producing oil less than five years after our first discovery, which is well ahead of the industry average for similar projects. The Liza development and future projects will provide significant economic benefits to Guyana.”
Liza Phase 1 is expected to generate over $7 billion in royalty and profit oil revenues for Guyana over the life of the project. Additional benefits will accrue from other development projects now being planned. Liza Phase 1 involves the conversion of an oil tanker into a floating, production, storage and offloading (FPSO) vessel named Liza Destiny, along with four undersea drill centers with 17 production wells. Construction of the FPSO and subsea equipment is under way in more than a dozen countries.
Liza Destiny will have a production capacity of 120,000 barrels of oil per day. A second FPSO with a capacity of 220,000 barrels per day is being planned as part of the Liza Phase 2 development, and a third is under consideration for the Payara development. Together, these three developments will produce more than 500,000 barrels of oil per day.
“Guyanese businesses, contractors and employees have been an essential element of our exploration, drilling and development progress,” Mallon said. “Our focus is on enabling local workforce and supplier development, and collaborating with the government to support the growth and success of Guyana’s new energy industry.”
About 50 percent of ExxonMobil’s employees, contractors and subcontractors are Guyanese, a number that will continue to grow as operations progress. ExxonMobil spent about $24 million with more than 300 local suppliers in 2017, and opened the Centre for Local Business Development in Georgetown, Guyana, to promote the establishment and growth of small- and medium-sized local businesses. The centre has enabled access to training and capacity-building support for more than 275 local businesses.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.
(Stabroek News, 8.Jun.2018) – Having long established itself as a significant contributor to tertiary education in Guyana, the Critchlow Labour College is seeking to embrace the demand for training in the various disciplines associated with the country’s emerging oil and gas industry to rebuild its reputation as a major contributor to education delivery in Guyana.
Principal of the College, Ivor English told Stabroek Business on Monday that the two-day preliminary Oil and Gas Course Seminar delivered late in May in collaboration with two Trinidad and Tobago companies Apollo Global Vision Ltd and Kaizen Environmental Services was intended to serve as an introduction to a wider ambition of creating a high-level Centre for Oil and Gas that will seek to offer courses that will equip graduates for rewarding jobs in the sector.
Towards this end the College has already signed a Memorandum of Understanding with Kaizen and Apollo under which the two specialist companies will be intimately involved in both the design and delivery of courses run by the local Centre for Oil and Gas.
English told Stabroek Business that the decision by the College to move in the direction of establishing an institution specializing in the training of Guyanese in oil and gas-related fields had to be seen within the context of the importance which the institution places on remaining relevant. Reminding of the period some years ago when the Critchlow Labour College’s certification in Industrial Relations was recognized as a vehicle for University of Guyana admission, English said that the MOU with the two Trinidad and Tobago companies was aimed at a “long-term relationship that would see the Centre for Oil and Gas transform into and Oil and Gas Academy located off the Critchlow campus. At that stage we will be taking our training in the various oil and gas-related disciplines to diploma and degree levels,” English told Stabroek Business.
At the same time English disclosed that the College intended to engage ExxonMobil and its various oil exploitation partners to discuss a role for the Academy in meeting some of the specialized needs associated with the oil and gas recovery programme. “We are in the process of opening communication with these entities with a view to assuring them that we have the skills to deliver their requirements,” English said.
Conceding that the decision to create an off-campus facility was informed by the reality of a lack of space on the Woolford Avenue campus to accommodate all of the materiel associated with the delivery of oil and gas programmes English said that in the short term the CLC will create the faculty space and administer the programmes for which it will receive a facilities fee.
Asserting that the growth of the College’s curriculum will have to take place against the backdrop of the modernization of the institution, English said that as funds are garnered from courses which are expected to become operational over time, “revenue will be set aside for physical upgrading, computerizing etc. Our focus is to create job readiness for oil and gas. In a way we are uniquely positioned to provide these services since we are already accommodating the operations of the MATPAL Marine Institute.
English told the Stabroek Business, meanwhile, that the need to garner funding to develop the infrastructure for delivery of an oil and gas curriculum depended on significant funding. He said that much of the momentum of the institution had been reduced on account of the previous administration’s decision to put an end to the granting of an annual subvention amounting to more than $30 million annually. Two years ago the current administration restored a $15 million subvention which the College said was inadequate to meet its needs. A lack of resources has meant that sections of the Critchlow campus had fallen into disrepair and English told Stabroek Business that the institution was determined to create a modern complex.
Secretary to the Board of the College and General Secretary of the Guyana Trades Union Congress (GTUC), Lincoln Lewis told the Stabroek Business that over the years the institution had “more than justified benefitting from a state subvention and that the current state of affairs as far as the subvention was concerned was reflective of “an insensitivity to the contribution which the Critchlow Labour College has made over the years to improving the skills and enhancing the formal qualifications of the workers of Guyana”.
English told Stabroek Business, meanwhile, the Oil and Gas Academy would be seeking to provide support to both the public and private sectors as the country seeks to build capacity in the oil and gas field.
(Energy Analytics Institute, Aaron Simonsky, 7.Jun.2018) – Kevin Ramnarine discusses the regional deep-water industry in the southern Caribbean during a technical speech in Trinidad on the emerging regional deep-water province of Suriname, Trinidad and Tobago and Guyana, which was hosted by the Geological Society of Trinidad and Tobago and streamed live.
(Energy Analytics Institute, Aaron Simonsky, 7.Jun.2018) –That’s according to comments by former Trinidad and Tobago Energy Minister Kevin Ramnarine.
“On average, deep-water projects need an oil price of US$42 per barrel to break even at an NPV10. Assuming a 15% internal rate of return hurdle (NPV15), 5 billion barrels of pre-sanction deep-water reserves now breakeven at US$50/boe or lower. This triples to 15 billion boe at US$60/boe,” said Ramnarine, speaking in Trinidad during a technical talk on the emerging regional deep-water province of Suriname, Trinidad and Tobago and Guyana, which was hosted by the Geological Society of Trinidad and Tobago and streamed live.
Ramnarine — a strategy energy advisor — also highlighted that during the period of 2012-2014, there were 510 deep-water exploration wells drilled in 55 countries, while during 2015-2017, there were 231 deep-water exploration wells drilled in 37 countries.
“We have four drill ships simultaneously working in this part of the world [Guyana and Suriname]. Five years ago that was probably something we couldn’t conceive of,” he said.
(Energy Analytics Institute, Ian Silverman, 31.May.2018) – Former Trinidad and Tobago Energy Minister Kevin Ramnarine will speak in Port of Spain about the regional deepwater industry in the Southern Caribbean.
An abstract from his technical talk about the regional deepwater industry in the Southern Caribbean, and the case of Guyana, Suriname & Trinidad and Tobago, follows:
“The 2015 discovery by ExxonMobil of oil in Guyana’s Stabroek Block, the discovery of natural gas by BHP Billiton in Trinidad and Tobago’s Block TTDAA 5 in 2017 and ongoing exploration in both countries and in Suriname have set the stage for a major deepwater oil industry in the Southern Caribbean which could potentially extend to Barbados. Such an industry will have a transformative effect on the practice of geoscience and all aspects of petroleum engineering. In addition, deepwater oil and natural gas commercialization require different skills and technologies different to what obtains on the shallow and average depth waters of continental shelf.”
For more details contact The Geological Society of Trinidad & Tobago at email@example.com
(Energy Analytics Institute, Piero Stewart, 30.May.2018) – Fuel smuggling from countries neighbouring Guyana is a major issue. The small South American country has developed the Fuel Marking Programme to address the issue.
What follows here within are questions from Guyana’s Stabroek News directed at the Guyana Energy Agency (GEA) and the answers from the latter.
1. Stabroek News (SN): SN has received numerous reports that fuel is being smuggled into Guyana from Venezuela. Is the GEA aware of this?
Guyana Energy Agency (GEA): Arising from complaints about 2004 that there was significant smuggling of fuel into Guyana, with about one third of the fuel used in Guyana believed to have been smuggled, the Fuel Marking Programme was established.
From 2006 to 2013, the percentage of sites found with significant dilution in at least one tank has progressively decreased from 34% in 2006 to 3% in 2013.
GEA has achieved 29 convictions since the commencement of Prosecutions for illegal fuel.
While we are unsure of the source of this illegal fuel, one may presume that it originates from neighbouring countries such as Suriname, Trinidad and Tobago and/or Venezuela.
The success of the Fuel Marking programme, and the fact that since its implementation there has been a significant drop in fuel smuggling, is testament to the fact that GEA has always strategized about where their presence is needed.
The Agency continuously monitors and reassesses their strategy to ascertain whether an impact is being made, or whether there is need for change with the aim of ensuring that Fuel Smuggling is curtailed.
2. Stabroek News: Has there been any dialogue between officials of the GEA and the police or the mining association or the Ministry of Natural Resources on the presence of illegal fuel in areas such as the North West and the Essequibo Coast. If so when last where any dialogues held and what were some of the recommendations made?
Guyana Energy Agency: In 2007, a Task Force on Fuel Smuggling and Contraband was convened under the auspices of the Ministry of Home Affairs to coordinate the efforts of the different law enforcement agencies in the fight against fuel smuggling and contraband. The resulting cooperation between the Guyana Police Force, Guyana Revenue Authority, Guyana Energy Agency, Guyana Defence Force Coast Guard and Customs Anti-Narcotics Unit (CANU) aided in several interdictions of illegal fuel and assistance in capturing, escorting and securing various transport vessels (both land and water). Cooperation from the Guyana Police Force in the detention of suspects and the GDF Coast Guard and Guyana Revenue Authority (GRA) in joint operations have proven invaluable in combating the illegal fuel trade.
The GEA is also part of the Hinterland Intelligence Committee (HIC), which was organized by the Guyana Police Force (GPF) and is chaired by the Commissioner of Police. Members of this committee include the Guyana Defence force (GDF), Civil Aviation Authority, Guyana Geology and Mines Commission (GGMC), Guyana Gold and Diamond Miners Association, Guyana Revenue Authority (GRA), Guyana Police Force, Association of Aircraft Owners, Ministry of Health, Ministry of Local Government, Guyana Forestry Commission and the Guyana Women Miners Organization, among others.
Many issues are discussed at monthly meetings of both the Task Force and HIC, including the issue of fuel smuggling.
Additionally, the GPF is usually consulted when there is an emergency or if a tip is received. GEA usually solicits the support of other enforcement Agencies as required.
3. Stabroek News: Are there any GEA officers present in Port Kaituma, any other part of the North West and the Essequibo Coast to check for illegal fuel? If so can you give a total figure or an average of the number of officers present in the Northwest and Essequibo and the locations where they are based. For example two are based at Port Kaituma and one close to the Venezuela border.
Guyana Energy Agency: GEA has permanent bases at Georgetown, Linden and Essequibo.
The GEA has more than 20 Field Officers tasked with testing fuel across the country.
To ensure operational integrity and security, the Agency cannot disclose the number of staff present at these locations.
4. Stabroek News: Is there a process in place by the GEA to (a) check fuel boats in the North West to ensure that they are meeting the required standards and if so how often is this done (b) to ascertain where the GEA’s presence is mostly needed for example in the case of the North West whether it would be more beneficial to have officers based near the Guyana/Venezuela border at points where it is known that illegal fuel passes through?
Guyana Energy Agency: Government, recognizing the challenges in supplying border areas has allowed “border trade” along border areas to the west as long as the materials being brought into Guyana are being utilized within the border area. For fuel, for the time being, this applies to all of Region 1; down the Cuyuni to below Aranka in Region 7, and sub-Region 1 of Region 8. At this time, fuel supplied from our coast to Region 9 is generally less costly from fuel coming across the Brazilian border. Government does not consider fuel traded across the border as illegal in the areas mentioned.
5. Stabroek News: In relation to the recent explosion at Port Kaituma, is the GEA conducting any investigations to ascertain whether the boat that exploded and the others which were burnt were carry illegal fuel?
Guyana Energy Agency: Fires and explosions fall under the purview/responsibility of the Guyana Fire Service and the Guyana Police Force.
In fact, the Guyana Fire Service is preparing a report which will be the basis for discussions amongst relevant Government Agencies and other stakeholders.
6. Stabroek News: Has GEA officials gone around the community to persons who are selling fuel to ascertain whether it is legal or illegal?
Guyana Energy Agency: Officers of the GEA visit the area at least twice per year to learn about what is happening in the area.
The Task Force on Fuel Smuggling and Contraband has, in the past, visited the communities.
7. Stabroek News: Have complaints ever been made to the GEA about the presence of illegal fuel at Port Kaituma and if so what has been done about it?
Guyana Energy Agency: See response at 4. above.
8. Stabroek News: On a general note how big an issue is illegal fuel in Guyana and where does the bulk if it comes from?
Guyana Energy Agency: Illegal fuel causes loss of revenue from related tax losses and also has a negative effect on legitimate businesses. Prior to 2003 Guyana was facing a large number of fuel smuggling and associated tax losses. Non-taxed fuel was being smuggled into the country and sold illegally to retail sites while taxed road fuels were being adulterated with untaxed kerosene. With no means of identifying which fuels were legally imported and which were smuggled, and recognizing the ruinous effect of fuel smuggling on legitimate businesses, the Government of Guyana implemented the Fuel Marking Programme (FMP) in 2003.
With the technology being new to Guyana and the region at the time of its introduction, there was need for specialised legislation. The Guyana Energy Agency Act 1997 was therefore amended in 2004 to provide specifically for licensing of the different classes of fuel dealers and for the marking of all legitimately imported fuel. Subsidiary legislation in the form of the Petroleum and Petroleum Products Regulations 2004 was also created to regularize fuel operations.
The Fuel Marking Programme was charged with the responsibility of ensuring that all gasoline, diesel and kerosene were properly ‘marked’ at a known concentration at all legitimate import points and also collecting and testing samples of fuel from various parts of the country including wholesalers, retailers, distributors, transporters, commercial consumers and any person in possession of fuel for the relevant marker(s).
The constant monitoring and maintenance of the Fuel Marking System’s integrity is absolutely necessary for its continued success.
While we are unsure of the source of this illegal fuel, one may presume that it originates from neighbouring countries such as Suriname, Trinidad and Tobago and/or Venezuela.
9. Stabroek News: Why do you think persons insist on transporting and using illegal fuel as oppose to legal fuel?
Guyana Energy Agency: GEA too would like to know.
10. Stabroek News: What are some of the dangers attached to having illegal fuel in one’s possession?
Guyana Energy Agency: Persons found with illegal fuel can be prosecuted.
Illegal fuel can also affect consumers owing to the fact that usually, the illegal fuel that comes into the country is of a lower quality than the legal one. We have found that often the illegal fuel is smuggled in dirty containers and it is exposed to salt water (sea water) which causes it to become contaminated. The use of contaminated fuel damages equipment. Contaminated fuel can cause damage to fuel pumps, cause injectors to become blocked, damage fuel filters and spark plugs.
There are also safety concerns attached to having illegal fuel in one’s possession. In trying to hide an illegal operation a person may compromise safety to conceal the said operation.
11. Stabroek News: In addition to marking fuel, does the GEA’s work also entail ensuring that the boats meet the required standards for transporting and storing fuel?
Guyana Energy Agency: A Bulk transportation Licence from the GEA if a person is transporting an aggregate quantity of 2000 litres of petroleum and petroleum products in a vehicle, vessel or boat.
As part of its licensing process for the Bulk Transportation of fuel in boats/vessels, GEA’s Officers conduct an Inspection of the facilities and operators are required to submit: a) Petroleum License from the Guyana Fire Service (GFS) b) Maritime Administration Department (MARAD) Inspection Certificate c) Captain’s License d) Vessel License (MARAD).
GEA continuously monitors and evaluates its strategies and procedures. In 2013 GEA conducted research on Fuel handling Standards used in India, USA, Canada and Europe for Vessels, Trucks and Tankers transporting Fuel and petroleum products.
GEA subsequently collaborated with the Guyana National Bureau of Standards (GNBS) and Guyana Fire Service (GFS) to research and formulate draft guidelines for the transportation of fuel using approved containers and drums. During this process Regulations and Guidelines from Trinidad and Tobago, USA and Canada, for transporting fuel by Tanker Wagons and other vessels were examined. Precedents were also obtained, and best practices extracted and reviewed, to ensure practicality and applicability to Guyana.
Two standards were then drafted, and submitted to GNBS and GFS, by the Guyana Energy Agency. A Technical Committee has been convened by GNBS with representation from relevant stakeholders. This committee is currently reviewing the standards with the aim of having it approved and published.
12. Stabroek News: Does the GEA have a list of persons in the Northwest who transport fuel and if one wants to enter into such a business what is the process in place for doing so?
Guyana Energy Agency: Answer: See response in 4 above.
A link to the original PDF on the Guyana Energy Agency (GEA) website follows:
(Energy Analytics Institute, Aaron Simonsky, 24.May.2018) – Energy Analytics Institute, formerly LatinPetroleum Inc., continues to promote its “Energy Education Initiative” in the Americas, also known as “NRG ED.”
NRG ED is structured to work with K-12 schools, community colleges, four-year colleges and universities, workforce training programs, communities and businesses, and aims to promote reduction of non-renewable energy usage in favor of renewable energies. However, the core of the initiative is education, without which the NRG ED initiative would not be.
“At its core the initiative is really focused on education,” said Chad Archey, Editor-in-Chief at Energy Analytics Institute from Atlanta, Georgia.
EAI views basic education as most important in the overall learning process and also promotes educational initiatives and research from grade school to the professional level related to the energy sector. EAI aims to foment constructive dialogue regarding energy usage as well as ways to reduce the carbon footprint left by non-renewable energy resources through the following: 1) educational consultancy, 2) development and distribution of educational and training materials, and 3) promotion of debate and discussion regarding renewable energy alternatives.
Energy Analytics Institute (EAI), formerly LatinPetroleum Inc. (dba LatinPetroleum.com), is a Houston-based independent company focused on producing non-biased news, updates and special reports for investors interested in the Latin America and Caribbean petroleum sectors.
(Seeking Alpha, Carl Surran, 1.May.2018) – Exxon Mobil defends its oil production contract with Guyana after the International Monetary Fund recommended the country rewrite its tax laws to increase its share of profitable oil and close out loopholes.
“We wouldn’t see any need to renegotiate,” says Erik Oswald, XOM’s VP for exploration in the Americas. ‘The experts are saying there’s nothing unusual or strange about the 2016 contract. [It’s a] middle of the road average contract” for a frontier country, citing studies by Wood Mackenzie and Rystad Energy.
Guyana has become a critical area for XOM, which is struggling to stem production declines across its global business; the company’s deepwater discoveries there are enormous and highly profitable, as breakeven costs including taxes are only ~$26/bbl vs. current Brent prices of ~$75/bbl.
Oswald says a dry hole drilled recently, only the second among seven successes, hasn’t dimmed XOM’s view of Guyana’s potential, as plenty of “headroom” remains for the discovery to increase beyond the 3.2B barrels already found.
“The most important thing… is this is production coming out super quickly,” Oswald says. “We’re going to get real high quality, extremely profitably production, early 2020. That’s a reasonable target.”
(Energy Analytics Institute, Aaron Simonsky, 1.May.2018) – The United Nations Economic Commission for Latin America and the Caribbean, also known as ECLAC or CEPAL by its Spanish acronym, projects economic activity in troubled Venezuela will contract 8.5% in 2018.
Gross domestic product or (GDP) estimates for other important countries and regions follows:
(World Oil, 30.Apr.2018) – Hess Corporation has announced that its subsidiary, Hess Guyana (Block B) Exploration Limited, had reached agreement with Esso Exploration and Production Guyana Limited (ExxonMobil) to acquire a 15% participating interest in the Kaieteur Block, offshore Guyana. The Cooperative Republic of Guyana has provided Hess and ExxonMobil an instrument detailing the transfer of interest, which has been completed.
The Kaieteur block is located approximately 155 mi (approximately 250 km) offshore the coast of Guyana, adjacent to the Stabroek Block. The Kaieteur Block is approximately 3.3 million acres (approximately 13,535 km2), which is equivalent in size to more than 580 deepwater blocks in the Gulf of Mexico. The work program in 2018 will include processing and interpretation of approximately 5,700 km2 of 3D seismic data and evaluation of a future drilling program.
Significantly, the Kaieteur Block lies in the same geological basin as the Stabroek Block, where total recoverable resources of more than 3.2 Bboe have been discovered to date. Hess has a 30% working interest in the Stabroek Block.
(Asianet-Pakistan, 28.Apr.2018) – ‘Unfortunately, the well did not encounter commercial quantities of hydrocarbons. Exploration wells come with a certain amount of risk and this is particularly true in frontier areas like Guyana. Success is not guaranteed,’ the local office of ExxonMobil said in a statement.
The well is the second one to turn up dry out of the eight wells that were drilled in the Stabroek Block area so far.
ExxonMobil’s Vice President and Secretary, Jeff Woodbury, who made the announcement, said ‘the Soribrum well reached total depth this week but failed to encounter commercial quantities of hyrdrocarbons’.
The company said that it began drilling the Sorubim well on April 3 and that the drill ship, Bob Douglas, will complete this well and then move to begin drilling the Liza Phase 1 wells.
Woodbury said additional drilling is planned later this year as ‘we continue to explore the full potential of the Stabroek Block’.
The company said the Stena Carron drill ship will continue to explore and evaluate other areas of the block. The Stena Carron is currently drilling the Liza 5 well, which will likely be followed by a new prospect, called Long Tail.
(Stabroek News, 23.Mar.2018) – “While the front-loading of contracts and the securing of large contracts might be politically popular it might prove to be economically disastrous, University of Guyana Business Professor Leyland Lucas has said in an article that seeks, in part, to respond to the popular argument touting the virtue of so-called front-loading, that is, the drawing down of significant cash amounts of as yet unearned income from the oil and gas industry.
Lucas, who is serving as Visiting Professor at UG’s School of Entrepreneurship and Business Innovation (SEBI) says in his article that there could be pitfalls associated with the popular “up-front” or front-loading argument that has been steadily gaining traction among ordinary Guyanese.
(By Lakhram Bhagirat and Leyland M. Lucas, Stabroek News, 23.Mar.2018) – In the late 1990s, Guyana signed an Oil and Gas exploration agreement with Exxon’s subsidiary, EEPGL. That agreement not only permitted significant activity by Exxon, but also provided Guyana with a small subsumed royalty of no more than 1%. The agreement was also in clear contravention of Guyana’s laws, which stipulated the number of blocks that could be offered to a single entity. Though there were clear violations in law, Guyana has chosen to honour that obligation rather than raise it in other forums or attempt to invalidate it. As a nation, our word has been our bond.
Fast forward to our current situation where we find much being discussed regarding the current contract, and whether or not the nation’s best interests have been considered. In fact, in the past few months, we have been privy to an ongoing debate around the contracts signed by the Government of Guyana and Exxon. This debate has gotten so intense that some have even questioned the integrity and negotiating ability of governments in other developing countries, where the exploration of oil and gas is ongoing. Yes, in the case of Guyana, there is a great deal of evidence to suggest that better could have been done. But, who are we to question the outcome, when we were absent from the process? As my grandmother would often say when a family member chose to criticize others ‘make sure that your house is clean before telling someone else that theirs is dirty.’
In an earlier article on local content, I made the point that oil is no longer a critical commodity. There is an abundance of oil in the global market, prices are highly volatile, and the world has begun a gradual process of shifting from fossil fuels to renewable sources of energy. These are realities that cannot be ignored. For example, within our hemisphere, we see significant declines in oil and gas production, yet very little evidence of a major impact in the global marketplace. Likewise, the Kingdom of Saudi Arabia, a major oil producer with one-fifths of the world’s reserves, has also begun the process of delinking its economy from oil-dependency and looking for newer ways to stimulate growth and development.
(CaribNation TV, 16.Mar.2018) – Guyana is poised to become the next big oil producer in the Western Hemisphere, attracting the attention and investment dollars of some of the biggest oil companies in the world.
Exxon Mobil and Hess announced the successful drilling of a deep water exploration well that may soon confirm that the seafloor beneath Guyana’s coastal waters contains one of the richest oil and natural gas discoveries in decades. Experts now estimate that one of its offshore fields alone, known as Liza, could contain 1.4 billion barrels of oil mixed with natural gas, comparable to some of the larger fields drilled in South America.
The question now is, will the money gained from Guyana’s oil boom get to the people of Guyana?
(CGX, 2.Mar.2018) – CGX Energy Inc. announced appointment of Drilling Engineer Michael (Mike) P. Stockinger as Project Operations Manager, who will be in charge of designing the company’s next offshore exploration well on the Corentyne Block offshore Guyana.
“We are delighted that Mike Stockinger has rejoined the company as our Drilling Engineer. Mike brings 40 years of experience in the oil and gas business specializing in drilling, completions, and production engineering and operations,” said Executive Chairman, Professor Suresh Narine. “He is also no stranger to CGX and the Guyana Basin, having designed and drilled the company’s 100% interest Eagle Shallow well on its Corentyne Block and participated integrally in the design and drilling of the company’s 25% interest Jaguar well on the former Georgetown block.”
Stockinger graduated from Stevens Institute of Technology in Hoboken, New Jersey, with a BS in civil engineering and has significant experience in onshore and offshore drilling and completions operations, including direct involvement in spars, TLP’s, FPSO’s, subsea “smart wells, and drilling deep subsalt wells. Stockinger started his career with Texaco in Morgan City, La, as a drilling engineer. He then joined Conoco and worked for 18 years in various positions in drilling and completions both onshore and offshore US and international, including as Drilling Manager for Gulf of Mexico. Subsequently he joined Kerr-McGee and worked for 12 years in various positions including GOM Regional E&P Manager and Vice President for Worldwide Drilling and Completions. During this period Mr. Stockinger was involved in numerous deepwater exploration wells and was responsible for drilling and completions on six spars. In 2006, after Kerr-McGee was acquired by Anadarko, Stockinger became a consultant and worked as Project Drilling Manager for Remora in Columbia, for Murphy in Australia and Suriname, and for CGX Energy in Guyana.
(Exxon Mobil, 28.Feb.2018) – Exxon Mobil Corporation announced its seventh oil discovery offshore Guyana, following drilling at the Pacora-1 exploration well.
ExxonMobil encountered approximately 65 feet (20 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,363 feet (5,597 meters) depth in 6,781 feet (2,067 meters) of water. Drilling commenced on Jan. 29, 2018.
“This latest discovery further increases our confidence in developing this key area of the Stabroek Block,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Pacora will be developed in conjunction with the giant Payara field, and along with other phases, will help bring Guyana production to more than 500,000 barrels per day.”
The Pacora-1 well is located approximately four miles west of the Payara-1 well, and follows previous discoveries on the Stabroek Block at Liza, Payara, Liza Deep, Snoek, Turbot and Ranger.
Following completion of the Pacora-1 well, the Stena Carron drillship will move to the Liza field to drill the Liza-5 well and complete a well test, which will be used to assess concepts for the Payara development. ExxonMobil announced project sanctioning for the Liza phase one development in June 2017. Following Liza-5, the Stena Carron will conduct additional exploration and appraisal drilling on the block.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). 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.
(Energy Analytics Institute, Ian Silverman, 28.Feb.2018) – The Liza discovery was the largest oil discovery in 2015 and has significantly de-risked the Cretaceous Tertiary play, proving the existence of a working petroleum system in this portion of the basin, according to a “Guyana exploration basin” asset report summary published by Wood Mackenzie on its website.
The firm went on to say, “We expect exploration in this basin to ramp as the potential for material discoveries and material value creation is favourably high. The Guyana Basin is predominantly an offshore basin, stretching across the waters of Guyana, Suriname and French Guiana. The basin shares many similarities with emerging hydrocarbon plays on the Atlantic Margin of West Africa, including offshore Ghana, where the giant Jubilee discovery was made.
(Mac Margolis, 16.Feb.2018) – Wedged between Brazil and Venezuela, Guyana could easily go unnoticed. It has fewer than 750,000 people and a per capita income of $4,300, half the regional average, qualifying it as the hemisphere’s third-poorest nation.
At the moment, Guyana also might be its luckiest. Having struck big oil offshore starting in 2015, industry experts reckon total reserves at around 2 billion barrels. That bounty could make Guyana immeasurably rich and Latin America’s biggest producer in less than a decade – or just another Trump-hole.
History abounds with tales of raw-material bonanzas turned into, at best, a mixed blessing for poor countries. Dutch disease, corruption (think Venezuela and Nigeria), life support for dictators: The gift of oil comes with many afflictions. A classic International Monetary Fund study found that living conditions in oil-rich nations in sub-Saharan Africa were no better or worse than countries without oil.
“Equatorial Guinea comes to mind,” Rice University energy scholar Francisco Monaldi told me, in reference to the Central African dictatorship which, after striking oil in the 1990s, went in a matter of years from desperately poor to desperately rich.
“We know historically that if you’re poorly managed when you received the windfall, you’ll likely have difficulty capitalizing your bounty for development,” said Monaldi.
The example is not lost on Guyana, which has a vibrant if flawed — “partially free,” according to Freedom House — democracy, but frail institutions and admittedly scarce human capital to manage the coming wealth. “Guyana has almost zero capacity now for dealing with oil and gas,” Jan Mangal, petroleum adviser to President David Granger, said recently at the University of Guyana.
While officials in Georgetown quickly disavowed Mangal, his comments were hard to ignore. With major oil set to flow as soon as 2020, authorities are bracing both for the shock of wealth and its attendant woes. The bounty will not come all at once: Exxon and other producers will use most of the early oil to pay down startup costs. But that will only delay the impact. “It’s like drinking from a fire hose right now,” Vincent Adams, a Guyanese engineer who recently retired from the U.S. Department of Energy, told me.
One of the biggest challenges is who will manage the gusher. Guyana is a nation of emigrants. Some 463,000 Guyanese, or 60 percent of its population, live abroad, and the outflow continues apace. What’s worse, the leavers have included roughly nine of every 10 graduates with higher education — energy experts and oil engineers among them — according to the World Bank. “The cream of the crop migrated,” said Adams. “In terms of local capacity, we are at a serious disadvantage.”
Guyana could attenuate the brain drain by reaching out to its diaspora. There are more than 100 reported expatriate organizations, and as a group overseas Guyanese consistently send more money back home than foreign investors plow into the economy every year, according to a recent study by Hisakhana Pahoona Corbin and Luis Eduardo Aragon of the Center for Advanced Amazonian Studies. “We have a repository of knowledge outside of Guyana which is amazing,” said Adams.
The government belatedly began to tap this talent pool, launching an official Guyana Diaspora Project in late 2012, but the effort has been criticized as timid. “In spite of this potential, few institutional arrangements have been put in place to better engage the diaspora or to unlock their potentials as an alternative for accelerating development,” Corbin and Aragon wrote last year.
Granted, Guyana will have some help. The Extractive Industries Transparency Initiative is counseling officials on how to avert corruption. Multilateral lenders are training Guyanese to develop an investment plan and mitigate the fiscal risk of the oil boom. “The sudden inflow of wealth could become a tsunami, and if it’s not managed well, could leave a dire situation,” Ramon Espinasa, general coordinator of the Extractive Sector Initiative at the Inter-American Development Bank, said in an interview.
Big Oil also knows the stakes. Despite the familiar criticisms — “Dem know wha Exxon do to govt all over de world,” one marquee local columnist warned in a mock patois — drillers have every reason to make sure their investment is safe.
The hardest part will be down to the host country, of course. “Until recently, small countries like ours were sheltered by benefactors in the east or west. Now the Berlin Wall is gone and the protectors have become our competitors, and we’re left to deal with the world markets,” said Adams.
That’s the challenge the country’s emigrants faced when they remade their careers abroad. Now Guyana must reach out to its diaspora ringers and bring that lesson home.
(CaribbeanLife, Bert Wilkinson, 31.Jan.2018) — Now that Guyana’s oil and gas basin has been deemed as one of the hottest and most exciting prospects in the world, Shell Oil has to be regretting its decision to withdraw as an investment partner with United States giant ExxonMobil, which has so far drilled six successful wells offshore Guyana worth about 3.2 billion barrels of oil, officials said Monday, Jan. 29.
Minister of Natural Resources Raphael Trotman said Exxon’s mid 2015 “world class” oil and gas find has clearly taken away all the fears and apprehensions about wasting investor dollars exploring offshore Guyana and Shell is one company which has missed out on the chance to cash in on one of the world’s largest oil finds in more than a decade. Exxon plans to begin producing about 120,000 barrels of oil daily in early 2020. This will make Guyana the largest producer in the Caribbean Community. The others are Trinidad, Suriname and Barbados.
“Shell was with Exxon on the Stabroek block and pulled out. They now maybe rue the day that they ever did that. Now, Shell has signaled that it wants to come back to Guyana,” Trotman noted, saying that all the major oil and gas companies in the world are either vying for their own offshore blocs or buying into smaller companies which have deep water concessions near Exxon’s highly successful offshore fields.
Exxon spokeswoman Kimberly Brasington Monday confirmed that Shell was the original partner with Exxon in the six million acre-plus concession area after Exxon had signed its exploration agreement with Guyana back in 1999 “but chose to pull out. They made the decision not to take the risk. We therefore had to go out there and look for new partners in Hess Oil and Nexen (of China). Yes that was indeed the case,” she said.
Geology and Mines Commissioner Newell Dennison said Shell pulled out about a decade ago and has been sending signals about coming back into the basin but he has seen no paper work regarding this so far.
Exxon and its partners plan to drill 17 wells in the first phase of their offshore venture and up to 40 others ion phase two. The company has already filed paperwork for permission to begin preparations for phase two of its offshore operations and has begun public consultations about this phase.
Spain’s Repsol, Tullow Oil of the United Kingdom, Chevron, Brazil’s Petrobras, Eni of Italy, TOTAL of France and British Petroleum are among big oil players all vying for participation in the country’s fledgling oil and gas sector.
“These companies are only expressing interest because ExxonMobil has de-risked the basin. Zero from zero is nothing. If you have oil and no one is troubling it, then it is worth zero. The oil may be worth a lot, but only if it is produced. We are moving to production, but it took ExxonMobil to find what others have been looking for,” Trotman said.
(Exxon Mobil, 5.Jan.2018) – Exxon Mobil Corporation announced positive results from its Ranger-1 exploration well, marking ExxonMobil’s sixth oil discovery offshore Guyana since 2015.
The Ranger-1 well discovery adds to previous world-class discoveries at Liza, Payara, Snoek, Liza Deep and Turbot, which are estimated to total more than 3.2 billion recoverable oil-equivalent barrels.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. began drilling the Ranger-1 well on Nov. 5, 2017 and encountered approximately 230 feet (70 meters) of high-quality, oil-bearing carbonate reservoir. The well was safely drilled to 21,161 feet (6,450 meters) depth in 8,973 feet (2,735 meters) of water.
“This latest success operating in Guyana’s significant water depths illustrates our ultra deepwater and carbonate exploration capabilities,” said Steve Greenlee, president of ExxonMobil Exploration Company. “This discovery proves a new play concept for the 6.6 million acre Stabroek Block, and adds further value to our growing Guyana portfolio.”
Following completion of the Ranger-1 well, the Stena Carron drillship will move to the Pacora prospect, 4 miles from the Payara discovery. Additional exploration drilling is planned on the Stabroek Block for 2018, including potential appraisal drilling at the Ranger discovery.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). 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.
(Exxon Mobil, 5.Oct.2017) – Exxon Mobil Corporation announced it made a fifth new oil discovery after drilling the Turbot-1 well offshore Guyana.
Turbot is ExxonMobil’s latest discovery to date in the country, adding to previous discoveries at Liza, Payara, Snoek and Liza Deep. Following completion of the Turbot-1 well, the Stena Carron drillship will move to the Ranger prospect. An additional well on the Turbot discovery is being planned for 2018.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. began drilling the Turbot-1 well on Aug. 14, 2017 and encountered a reservoir of 75 feet (23 meters) of high-quality, oil-bearing sandstone in the primary objective. The well was safely drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water on Sept. 29, 2017. The Turbot-1 well is located in the southeastern portion of the Stabroek Block, approximately 30 miles (50 kilometers) to the southeast of the Liza phase one project.
“The results from this latest well further illustrate the tremendous potential we see from our exploration activities offshore Guyana,” said Steve Greenlee, president of ExxonMobil Exploration Company. “ExxonMobil, along with its partners, will continue to further evaluate opportunities on the Stabroek Block.”
The Stabroek Block is 6.6 million acres (26,800 square kilometers). 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.
(OilPrice.com, Haley Zaremba, 22.Aug.2017) – In the future, we may be hearing about the Caribbean a whole lot more when talking about oil and gas. Previously, the area was virtually off the map for the fossil fuels industry, despite its proximity to the vast oil reserves of Venezuela. Now, the Caribbean has suddenly become a point of interest since ExxonMobil discovered major reservoirs in nearby Guyana in 2015.
After their initial huge discovery of the Liza oil field 2 years ago, Exxonmobil also announced last month that they’ve discovered more oil in the Payara reservoir off the coast of Guyana, increasing the total discovery to approximately 500 million barrels. This is huge news for both Exxonmobil and for Guyana, which ranks among the poorest countries in the Western Hemisphere.
ExxonMobil (partnered with Hess Corp. and Statoil) has also recently purchased a new deepwater block for exploration off the coast of neighboring Suriname, another potentially oil-filled nation. Some in the industry are already referring to the Guyana-Suriname Basin as the next big oil region.
Now, those good fortunes could be spreading to the Caribbean as well. Trinidad and Tobago has long been the Caribbean’s largest oil and gas producer. The nation has depended economically on their petroleum reserves since the 1990s, with the energy sector currently comprising 34.9 percent of the country’s GDP. However, more recently the small island-nation’s production has been in decline as production from mature fields has waned and exploration for new fields has been slow in starting. Now, Trinidad and Tobago is hoping that the discoveries in nearby Guyana will bring more interest and investment to the Caribbean.
It’s looking like Trinidad and Tobago will get their wish. Just this month BP Trinidad and Tobago announced two major discoveries totaling approximately two trillion cubic feet (tcf) of gas, which the company’s president called “the start of a rejuvenated exploration program on the Trinidad shelf”.
Similarly encouraged by the massive discoveries in Guyana over the last few years and the foreign interest it has garnered, several other Caribbean nations are beginning to assert themselves as potentially oil-rich countries and attempting to woo foreign companies to start investing in exploration around their islands. One of the biggest examples of this is Jamaica, who have recently caught the attention of UK-based Tullow Oil.
Last week Tullow announced plans to return to offshore locations off the southern coast of Jamaica to explore a field of “live oil” that was brought to their attention by local fisherman earlier this year. The firm will ramp up their 3D seismic surveys this year in hopes that the floating oil will lead them to vast oil fields the likes of their neighbors to the south and the nearby Gulf of Mexico.
The Bahamas has also recently publicized their plans to invite international companies to drill in deep waters off the coast, pointing not only to Guyana and the Gulf, but also to neighboring Cuba’s oil reserves as an indication of what treasures may be laying under the surface of the sparkling Caribbean Sea.
Exploration of oil reserves in the Caribbean may also soon be ramped up and revolutionized by major technological advancements from Ursa Space Systems. The high-tech company has announced a planned expansion to take a global oil inventory, with the Caribbean as one of its first major surveyed regions. Ursa will use satellite imagery to provide reliable and independent weekly inventories of oil stocks down to the tank level for easy calculations and better insight on oil supply and demand, especially in areas of the world where there has previously not been readily-available data.
(Exxon Mobil, 25.Jul.2017) – Exxon Mobil Corporation announced it has discovered additional oil in the Payara reservoir offshore Guyana, increasing the total Payara discovery to approximately 500 million oil-equivalent barrels.
These positive well results increase the estimated gross recoverable resource for the Stabroek Block to between 2.25 billion oil-equivalent barrels and 2.75 billion oil-equivalent barrels.
The well was successfully drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Limited and encountered 59 feet (18 meters) of high-quality, oil-bearing sandstone in the Payara field.
It was safely drilled to 19,068 feet (5,812 meters) in approximately 7,000 feet (2,135 meters) of water. The well is only 12 miles (20 kilometers) northwest of the recently funded Liza phase 1 project on the Stabroek Block, which is approximately 130 miles offshore Guyana.
“Payara-2 confirms the second giant field discovered in Guyana,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Payara, Liza and the adjacent satellite discoveries at Snoek and Liza Deep will provide the foundation for world class oil developments and deliver substantial benefits to Guyana. We are committed to continue to evaluate the full potential of the Stabroek Block.”
The Stabroek Block is 6.6 million acres (26,800 square kilometers). 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.
(Exxon Mobil, 13.Jul.2017) – Exxon Mobil Corporation announced that its subsidiary ExxonMobil Exploration and Production Suriname B.V., along with co-venturers Hess and Statoil, signed a production sharing contract for Block 59 with Staatsolie Maatschappij Suriname N.V., the national oil company of Suriname. The block adds significant acreage to ExxonMobil’s operated portfolio in the Guyana-Suriname Basin.
Deepwater Block 59 is in water depths ranging from nearly 2,000 meters to 3,600 meters, located approximately 190 miles (305 kilometers) offshore Suriname’s capital city, Paramaribo. The block is 2.8 million acres, or 4,430 square miles, and shares a maritime border with Guyana, where ExxonMobil is the operator of three offshore blocks, including the world-class Liza field discovered by ExxonMobil in 2015.
“We look forward to working with Staatsolie and our co-venturers to evaluate the potential of this new acreage,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Adding this block enhances our leading global deepwater portfolio.”
Suriname represents a new country for ExxonMobil’s upstream business. The company has investments throughout South America. Following contract signing, the co-venturers are preparing to begin exploration activities, including acquisition and analysis of seismic data.
ExxonMobil and consortium partners Hess and Statoil each hold a third of the interest in the block. ExxonMobil is the operator.
(Exxon Mobil, 16.Jun.2017) – Exxon Mobil Corporation said it has made a final investment decision to proceed with the first phase of development for the Liza field, one of the largest oil discoveries of the past decade, located offshore Guyana.
The company also announced positive results from the Liza-4 well, which encountered more than 197 feet (60 meters) of high-quality, oil-bearing sandstone reservoirs, which will underpin a potential Liza Phase 2 development. Gross recoverable resources for the Stabroek block are now estimated at 2 billion to 2.5 billion oil-equivalent barrels, which includes Liza and other successful exploration wells on Liza Deep, Payara and Snoek.
The Liza Phase 1 development includes a subsea production system and a floating production, storage and offloading (FPSO) vessel designed to produce up to 120,000 barrels of oil per day. Production is expected to begin by 2020, less than five years after discovery of the field. Phase 1 is expected to cost just over $4.4 billion, which includes a lease capitalization cost of approximately $1.2 billion for the FPSO facility, and will develop approximately 450 million barrels of oil.
“We’re excited about the tremendous potential of the Liza field and accelerating first production through a phased development in this lower cost environment,” said Liam Mallon, president, ExxonMobil Development Company. “We will work closely with the government, our co-venturers and the Guyanese people in developing this world-class resource that will have long-term and meaningful benefits for the country and its citizens.”
The Liza Phase 1 development can provide significant benefits to Guyana, including jobs during installation and operations, workforce training, local supplier development and government revenues to fund infrastructure, social programs and services.
The development received regulatory approval from the government of Guyana.
The Liza field is approximately 190 kilometers offshore in water depths of 1,500 to 1,900 meters. Four drill centers are envisioned with a total of 17 wells, including eight production wells, six water injection wells and three gas injection wells.
The Liza field is part of the Stabroek Block, which measures 6.6 million acres, or 26,800 square kilometers. Esso Exploration and Production Guyana Limited is operator and holds a 45 percent interest in the block.
Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent.
Esso Exploration and Production Guyana Limited is continuing exploration activities and operates three blocks offshore Guyana – Stabroek, Canje and Kaieteur. Drilling of the Payara-2 well on the Stabroek block is expected to commence in late June and will also test a deeper prospect underlying the Payara oil discovery.
(Exxon Mobil, 30.Mar.2017) – Exxon Mobil Corporation announced positive results on the Snoek well offshore Guyana, confirming a new discovery on the Stabroek Block. 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.
ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. commenced drilling of the Snoek well on Feb. 22, 2017 and encountered 82 feet (25 meters) of high-quality, oil-bearing sandstone reservoirs. The well was safely drilled to 16,978 feet (5,175 meters) in 5,128 feet (1,563 meters) of water on March 18. The Snoek well is located in the southern portion of the Stabroek Block, approximately 5 miles (9 km) to the southeast 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 kilometers). 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.
(Energy Analytics Institute, Pietro D. Pitts, 2.Mar.2017) – Sleepy Guyana is gearing up to surpass twin-island nation Trinidad and Tobago in terms of oil production.
Production plans by Irving, Texas-based Exxon Mobil Corporation at the promising Stabroek Block offshore Guyana will assist the small country to initially produce more oil than its Caribbean neighbor Trinidad, which has been producing oil for over a century.
Exxon — which plans to make an investment decision later this year regarding finds at the Stabroek Block, including the Liza, Liza deep and Payara wells – expects production of 100,000 barrels per day in 2020 in the initial phase using a Float Production, Storage and Offloading (FPSO) unit, said Jeff Woodbury, Exxon Mobil Vice President of Investor Relations during a conference call on January 31, 2017.
“Guyana is to become the newest petrostate. It has two neighbors from which to learn what to do, Trinidad, and what not to do, Venezuela,” Francisco J. Monaldi, Ph.D. and Fellow in Latin American Energy Policy & Lecturer in Energy Economics at Rice University’s Baker Institute for Public Policy wrote in a twitter post.
The Stabroek Block covers 6.6 million acres (26,800 square kilometers). The operator of the block is Esso Exploration and Production Guyana Limited with a 45 percent interest. Other partners in the block include: Hess Guyana Exploration Ltd. with a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited with a 25 percent interest.
Trinidad produced an average of around 72,000 barrels per day in the eleven months between January and November of 2016, according to data published in a bulletin by the country’s Ministry of Energy and Energy Industries.
(Guyana Ministry of Natural Resources, 26.Jan.2017) – As part of the Ministry of Natural Resources’ continuous engagement of stakeholders on preparations of Guyana’s developing oil and gas industry, the Ministry hosted a number of meetings.
Members of the National Assembly including, members of the Parliamentary Sectoral Committee on Natural Resources, have also been engaged in the progress of activities as a part of regular briefs they have been provided from Minister Trotman and team at the Ministry on the progress of preparations for oil and gas production.
Further, efforts are underway to reach out to a wide range of stakeholders and the relevant private sector bodies and civil society groups have already benefited from these engagements. More consultations are scheduled to share the plans and policies that have been developed for the oil and gas sector with an even wider cross-section of Guyanese. These engagements will commence during February 2017.
The Ministry of Natural Resources welcomes opportunities to engage with all stakeholders for the advancement of the Oil and Gas industry in Guyana and encourages discourse that will promote understanding about the sector and transparency in its management.
(Guyana Ministry of Natural Resources, 19.Jan.2017) – The Ministry of Natural Resources would like to clarify for the benefit of the public an article by online media outlet The Huffington Post published on January 17, 2017.
The article, headlined ‘Conflict: Tillerson would Write the Rules for Exxon’s Major Oil Find in Guyana’ inaccurately states that the United States’ Energy Governance and Capacity Initiative (EGCI) is “involved in writing oil and gas regulations for the country of Guyana, where Exxon just announced another major oil find.”
There is no truth to the assertion in the article that the EGCI will be playing any part in writing Guyana’s oil governance laws, or any laws for that matter. The Commonwealth Secretariat is the lead agency supporting Guyana in preparing a suite of legislation for the oil and gas industry.
The opportunity is taken to indicate that while the EGCI has been lending support to Guyana for the past six years in the area of capacity building to manage eventual oil and gas revenues, it is in no way writing oil and gas laws or regulations for this country.
It is important to note that this relationship between Guyana and the EGCI programme in Guyana predates the Ministry of Natural Resources and the current Coalition Administration as it commenced in 2010. Indeed, the Government of Guyana has had many engagements with the officials of the United States’ Department of State as part of the capacity building initiative. However, the EGCI programme has only been partially implemented through a series of scoping studies that were conducted in 2016.
The EGCI can be a useful programme once implemented and is but one in a raft of assistance measures that Guyana is receiving to bolster and in some cases build capacity in oil and gas governance.
(Energy Analytics Institute, Piero Stewart, 16.Jan.2017) – ExxonMobil’s successful drilling streak continues in Guyana as the Irving, Texas-based company announced positive results from its second offshore well Payara-1, also located on the Stabroek Block.
The well, located just 16 kilometers from the earlier game-changing Liza discovery, encountered over 29 meters of high-quality, oil-bearing sandstone reservoirs.
(Exxon Mobil, 12.Jan.2017) – Exxon Mobil Corporation announced positive results from its Payara-1 well offshore Guyana. Payara is ExxonMobil’s second oil discovery on the Stabroek Block and was drilled in a new reservoir. The Payara-1 well targeted similar aged reservoirs that were proven successful at the company’s Liza discovery.
“This important discovery further establishes the area as a significant exploration province,” said Steve Greenlee, president of ExxonMobil Exploration Company. “We look forward to working with the government and our co-venturers to continue evaluating broader exploration potential on the block and the greater Liza area.”
The well was drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Limited, and encountered more than 95 feet (29 meters) of high-quality, oil-bearing sandstone reservoirs. It was safely drilled to 18,080 feet (5,512 meters) in 6,660 feet (2,030 meters) of water. The Payara field discovery is about 10 miles (16 km) northwest of the 2015 Liza discovery.
In addition to the Payara discovery, appraisal drilling at Liza-3 has identified an additional high quality, deeper reservoir directly below the Liza field, which is estimated to contain between 100-150 million oil equivalent barrels. This additional resource is currently being evaluated for development in conjunction with the world-class Liza discovery.
“These latest exploration successes are examples of ExxonMobil’s technological capabilities in ultra-deepwater environments, which will enable effective development of the resource for the benefit of the people of Guyana and our shareholders,” Greenlee said.
Drilling on Payara began on Nov. 12 with initial total depth reached on Dec. 2. Two sidetracks have been drilled to rapidly evaluate the discovery, and a well test is underway to further evaluate the successful well results. The well data will be analyzed in the coming months to better determine the full resource potential.
The Stabroek Block is 6.6 million acres (26,800 square kilometers). 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.
(Exxon Mobil, 20.Dec.2016) – Exxon Mobil Corporation subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), announced that it has awarded contracts to SBM Offshore for a floating production, storage and offloading (FPSO) vessel, a key step in moving the Liza field toward first production.
Under the contracts, SBM Offshore will perform front end engineering and design for the FPSO, and, subject to a final investment decision on the project in 2017, will construct, install and operate the vessel.
“Liza development activities are steadily progressing, and we’re excited to reach this important milestone,” said Neil Duffin, president of ExxonMobil Development Company. “We look forward to working with the government of Guyana to develop its valuable resources, which have the potential to provide long-term, sustainable benefits to the country.”
ExxonMobil submitted an application for a production license and its initial development plan for the Liza field in early December. The development plan, submitted to the Guyana Ministry of Natural Resources, includes development drilling, operation of the FPSO, and subsea, umbilical, riser and flowline systems.
The Liza field has a potential recoverable resource estimate in excess of 1 billion oil-equivalent barrels and is located in the Stabroek block approximately 120 miles (193 kilometers) offshore Guyana.
The Stabroek block currently comprises 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is the operator and holds a 45 percent interest in the Stabroek block. Hess Guyana Exploration Ltd. holds a 30 percent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 percent interest.
(Exxon Mobil, 30.Jun.2016) – Exxon Mobil Corporation said that drilling results from the Liza-2 well, the second exploration well in the Stabroek block offshore Guyana, confirm a world-class discovery with a recoverable resource of between 800 million and 1.4 billion oil-equivalent barrels.
“We are excited by the results of a production test of the Liza-2 well, which confirms the presence of high-quality oil from the same high-porosity sandstone reservoirs that we saw in the Liza-1 well completed in 2015,” said Steve Greenlee, president of Exxon Mobil Exploration Company. “We, along with our co-venturers, look forward to continuing a strong partnership with the government of Guyana to further evaluate the commercial potential for this exciting prospect.”
The Liza wells are located in the Stabroek block approximately 120 miles (193 kilometers) offshore Guyana. Data from the successful Liza-2 well test is being assessed.
The Liza-2 well was drilled by ExxonMobil affiliate Esso Exploration and Production Guyana Ltd., approximately 2 miles (3.3 km) from the Liza-1 well. The Liza-2 well encountered more than 190 feet (58 meters) of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to 17,963 feet (5,475 meters) in 5,551 feet (1,692 meters) of water.
“This exploration success demonstrates the strength of our long-term investment approach, as well as our technology leadership in ultra, deepwater environments,” said Greenlee.
The Stabroek block is 6.6 million acres (26,800 square kilometers). 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.
(Exxon Mobil, 20.May.2016) – Exxon Mobil Corporation announced a significant oil discovery on the Stabroek Block, located approximately 120 miles offshore Guyana.
The well was drilled by ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd., and encountered more than 295 feet (90 meters) of high-quality oil-bearing sandstone reservoirs. It was safely drilled to 17,825 feet (5,433 meters) in 5,719 feet (1,743 meters) of water. Stabroek Block is 6.6 million acres (26,800 square kilometers).
“I am encouraged by the results of the first well on the Stabroek Block,” said Stephen M. Greenlee, president of ExxonMobil Exploration Company. “Over the coming months we will work to determine the commercial viability of the discovered resource, as well as evaluate other resource potential on the block.”
The well was spud on March 5, 2015. The well data will be analyzed in the coming months to better determine the full resource potential.
Esso Exploration and Production Guyana Ltd. holds 45 percent interest. Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.
(Guyana Government Information Agency, 4.Sep.2015) – Minister of Governance, Raphael Trotman, has briefed Cabinet on the strategic, legislative, regulatory and institutional arrangements for the management of upstream activities in the Petroleum Sector.
This disclosure was made by Minister of State, Joseph Harmon, who briefed the media on the deliberations of the last meeting of Cabinet. According to Harmon, the policy as explained by Minister Trotman, is geared towards attracting and securing investments in upstream operations activity in the oil and gas sector in Guyana. It relates specifically to activities involving petroleum production, storage, refining, and marketing of these products.
The overall objective of this initiative is to place significant emphasis on ensuring that all the necessary arrangements be put in place for the effective and efficient development of the sector
Minister Harmon further advised that the Commonwealth Secretariat had already provided some assistance in this regard and assistance will be coming from other international agencies.
“It is a matter of for us to now agree on an updating on that policy, the UNDP has also offered technical cooperation and assistance, by providing us with some experts who are likely to come to Guyana in October to assist us in this work,” Harmon said.
Earlier this week, a team from ExxonMobil met with Minister Trotman and provided their continued commitment to proceed from the point of exploration to production of oil and natural gas. Trotman holds ministerial responsibility for natural resources.
(Guyana Government Information Agency, 4.Sep.2015) – The government of Guyana believes that its responsibility and obligation are to ensure that there will be no shortage of fuel in Guyana, and so must do everything possible to keep the wheels of industry turning. This is according to Minister of State, Joseph Harmon, who stated that is against this background that the agreement to purchase fuel from Trinidad and Tobago was made.
“It is the government’s commitment to ensure that there is a reliable and regular supply of fuel, to drive industry in this country, and we as a government will do what is necessary in the public interest, to ensure that the wheels of industry continue to turn,” Minister Harmon told media operatives, at his post Cabinet press briefing.
According to Harmon, Cabinet was briefed on this matter by the Minister of Public Infrastructure, David Patterson. Guyana has been purchasing fuel from Venezuela under the PetroCaribe arrangement, but there have been occasions when shipments arrived late.
“A few weeks ago, the vessels that had gone to Venezuela to collect fuel, they were not provided with the fuel on time, and this type of ‘on and off’ arrangement, we have to ensure that we have an alternative arrangement put in place, to ensure that this will not lead to a shortage of fuel in Guyana,” Harmon said.
According to Harmon, fuel was already purchased form Trinidad and Tobago. “We have both arrangements in place, a standby arrangement, which we will utilize from Trinidad and Tobago, and the PetroCaribe arrangement, which is in place by contract,” he explained.
Questioned on the feasibility of the new arrangement, Harmon said, “We do not see or feel that this arrangement will put in jeopardy any of the users of petrol/fuel in the country, in fact, it is feasible, the terms are very favourable for us and I believe that we have a commitment from that country for the supply of petrol. The financial arrangement is no less favourable than that which we receive under the PetroCaribe agreement.” Trinidad and Tobago is aware of Guyana’s arrangement with Venezuela through the PetroCaribe agreement. In the event there is a shortfall or a problem with that agreement, the Trinidad facility will be there to cushion the effect.
(GINA, 9.Jul.2015) – Guyana’s President David Granger reiterated that diplomacy will remain as his country’s first option as it stands resolute against all forms of aggression.
“We have never, as an independent state, provoked or used aggression against any other nation, we have never used our political clout to veto development projects in another country,” said Granger, speaking during an address to the country’s National Assembly about the territorial claims made by Venezuela.
Granger said, Guyana has never discouraged investors willing to invest in another country, never stymied development of another nation state and as such “does not expect and will we condone, any country attempting to do the same to us.”
(Guyana Foreign Affairs Ministry, 28.Feb.2015) – Guyana’s Ministry of Foreign Affairs wishes to inform that consequent upon a communication being sent from the Venezuelan Foreign Minister to the Country Manager of Esso Exploration and Production Guyana Limited objecting to the despatch of a rig to proceed with the exploration of an oil well in the concession granted by the Government of Guyana, the Government of Guyana has despatched a Note Verbale to the Venezuelan Foreign Ministry.
The Ministry of Foreign Affairs has requested that the Government of the Bolivarian Republic of Venezuela desist from taking any actions that could only result in the stymying of the development of Guyana and its people and that would be in contravention of international law.
The Ministry has also informed CARICOM, UNASUR, the OAS, the Commonwealth as well as the United Nations Secretary General about this recent action by Venezuela.