GUYANA 3

Africa Oil lifts stake in Eco

Canadian firm Africa Oil boosted its share in Eco Atlantic oil company currently preparing for a potentially transformational drilling campaign offshore Guyana.

Stena Forth drillship; Source Stena Drilling Ltd

Stena Forth drillship; Source Stena Drilling Ltd

Africa Oil Corp acquired 4,752,850 common shares of Eco (Atlantic) Oil and Gas Ltd. for US$1.05 per common share for a total consideration of US$4,999,998.

The common shares were acquired by Africa Oil on a non-brokered private placement basis.

With the acquisition and together with the 29,200,000 common shares of Eco held by Africa Oil prior to the acquisition, Africa Oil now owns around 18.8% of Eco’s issued and outstanding share capital.

“Africa Oil acquired the common shares for investment purposes and does not currently have the intention of exercising control or direction over Eco. Africa Oil will review its holdings from time to time and may continue to acquire and/or dispose of additional securities of Eco according to market conditions and other relevant factors in the future.” Africa Oil said.

Eco – which owns highly prospective assets off Namibia and Guyana – closed the placing and subscription of shares as originally announced on April 4, 2019. The company, in aggregate, raised $17 million before expenses through an oversubscribed placing and subscription of 16,159,695 new common shares of no par value in the capital of the company.

Funds raised will be used to drill Eco’s share of up to four potential new exploration or development wells, in addition to the committed Jethro and Joe wells scheduled in 2019.

Eco is a partner with a 15 percent share in the Tullow Oil-operated Orinduik block offshore Guyana. French oil firm Total is also a partner in the block.

Orinduik Block partners in November 2018 approved the initial 2019 work plan and budget for the first Orinduik exploration well – the 250 million barrel Jethro-Lobe Tertiary prospect. This prospect, similar to the Exxon Hammerhead discovery in the adjacent Stabroek block, is scheduled to be drilled in June using the Stena Forth drillship.

The partners approved the drilling budget and the location of the second well – the Joe prospect. The plan is to start drilling the Joe well after completion of the Jethro drilling, in mid-July 2019. Joe is a 150 mmboe (P50 – Best Estimate) Upper Tertiary target which has a 43.2% chance of success, as estimated in the independent (NI51-101 Compliant) report by Gustavson Associates.

Orinduik Block received a boost to 3,981 mmboe Gross Prospective Resources (P50) from previously estimated 2,913 mmboe, following an independent competent person’s report by Gustavson Associates. Operator Tullow described the upcoming wells as high-risk, high potential prospects.

The block lies near the Exxon operated Stabroek block where the oil major made 13 oil discoveries in the past three years and where it could deploy up to five FPSO’s to develop the resources.

(Press Statement from Ramps Logistics)

UK based Tullow Oil will drill their first exploration well, Jethro-1, in Guyana during the second quarter of 2019, followed by a second well named Joe.

[Tullow operates the Orinduik Block with partners Total and Eco Atlantic.]

In January 2019, Ramps Logistics secured the fully integrated cross-border logistics contract inclusive of shore base provision and management, marine agency, personnel logistics, freight forwarding and customs brokerage. Further to this is a host of 3rd party services such as waste disposal, tank cleaning and CCU provision.

Since 2015, Ramps has provided the full complement of cross-border logistics services to ExxonMobil, in support of their exploration and development drilling in Guyana. Ramps has also managed similar cross-border projects for Tullow Oil and Kosmos Energy in Suriname during 2017 and 2018.

Founded in 1985, Ramps has offices in Trinidad, Guyana, Suriname, Miami and Houston with total staff count exceeding 500 persons operating in the region and the US.

[Tullow Oil has over 85 E&P licences across 17 countries, divided into three Business Delivery Teams: West Africa, East Africa and New Ventures. Tullow’s most famous interest is as an operator of the Jubilee Field in Ghana, a massive deep-water oil field discovered in 2007. The 600 Mbbl field was one of the largest finds of the decade in West Africa.]

As Guyana prepares for the first oil to be produced from Exxon’s Liza development next year, the World Bank’s board of executive directors approved a $20 million credit from the International Development Association (IDA) to strengthen institutions, laws and regulations to promote good governance and prudent management of Guyana’s oil and gas sector.

Announcing the credit , the World Bank noted Guyana’s position among the 25 largest oil reserve-holders in the world after a series of discoveries since 2015. Annual GDP growth is projected to rise from 4.6 percent in 2019 to 34 percent in 2020.

Offshore Energy Today

Guyana Balance of Payment deficit up

… as exports show 4.4% decline for 2018
The Bank of Guyana annual report shows that while the Government has optimistic projections for next year, the Balance of Payment deficit and export earnings for the previous year continue to be a source of worry.

Figures provided by the bank show the overall Balance of Payment deficit widened due to a relatively larger current account deficit. Financial Analyst Sasenarine Singh said this is a clear sign that Guyana is stricken by a crisis of confidence as the export sector implodes. The overall deficit in 2018 is US$132.2 million, 90 per cent deterioration from 2017 when it was at $69.5 million. The current account deficit worsened to US$679.7 million in 2018 from a deficit of US$297.2 million in the previous year. Singh’s reason for this is the state of the export sector.

Exports declined by 4.4 per cent, equivalent of US$63.6 million to US$1,373.8 million. Revenue from sugar, rice, timber and gold declined by 44.1 per cent, 7.5 per cent, 6.9 per cent and 6.2 per cent respectively. Both the decline in exports and the average export price were cited in the case of sugar.

Exports from the fish and shrimp industry were down 2.5 per cent; exports of fruits and vegetables, pharmaceuticals, diamonds and molasses exports fell. “This is the story of Guyana, the export sector is in a tailspin and .. in April 2019 and we cannot hear .. of a coordinated set of policy measures to stem this implosion in the export sector. Sugar export earnings amounted to US$27.1 million, 44.1 per cent less than the 2017 earnings. This outturn was attributed to a 28.0 per cent decline in the volume of sugar exported as well as a decline in the average export price… the volume of sugar exported amounted to 77,796 metric tonnes or 30,191 metric tonnes less than the level exported in 2017.”

Bauxite and other exports increased by 22.6 and 1.0 per cent respectively. Bauxite export earnings totalled US$128.2 million, 22.6 per cent above the 2017 level. Other exports include commodities like rum.

The capital account surplus resulted from higher inflows to the Private Sector in the form of FDIs and to the Non-Financial Public Sector in the form of disbursements. This, Singh noted, is mainly as a result of oil investments, which are nothing other than a book entry when it comes to Guyana because the bulk of that investment does not directly impact the local economy but countries that are building the machinery and equipment needed in the sea. The Dutch are building the FPSO to temporarily store the crude oil. That is where those dollars will end up, in Holland, after passing through Guyanese books for bookkeeping purposes. Singh asks “what good is that for the well-being of the locals? Where are the hundreds of oil jobs from these billion-dollar investments?”

The overall deficit was financed from the gross foreign reserves of the Bank of Guyana and debt forgiveness. International reserves were equivalent to approximately 2.3 months of import cover. “The total volume of foreign exchange transactions increased by 19.6 per cent to US$8,548.1 million… the market was impacted by increases in transactions in most segments – licensed bank and non-bank cambios, as well as hard currency and foreign currency accounts.

The Balance of Payment tables contains statistical data on fiscal transactions, including imports and exports. To record a deficit, Guyana would have spent more on imports, among other things, than is derived from exports.

The parliamentary Opposition previously expressed concern over the increasing deficit in the balance of payments, which would continue to have serious implications for the local economy.

BBC Audio Program  “Assignment:   Guyana – bracing for the oil boom”

Was broadcast  at various times in the first week in May on both Radio 4 and the World Service.  It will be available to listen here (for a limited number of weeks).  Depending on your location, there may be a  requirement  to subscribe to the BBC Sounds web site.

If you have problems downloading from that source a .mp3 file is available here:-

It addresses, amongst other issues, the current shortage of courses in the various technologies needed for oil and gas development and government transparency.