Liza Destiny produces 120,000 bpd
Esso commissions gas injection system

December 20, 2020

─ Minister welcomes 120,000 barrels per day achievement
The US oil and gas major ExxonMobil Guyana President Alistair Routledge. announced that Liza Destiny floating production storage and offloading (FPSO) vessel reached full capacity of 120,000 bpd and successfully commissioned the gas injection system.

“We are incredibly proud of the tremendous work of our team in overcoming the challenges of the past year and safely bringing us to where we are today. This resilient group, which includes a growing number of Guyanese professionals, continues to persevere through the COVID-19 pandemic and initial startup challenges to deliver a world-class project.

“ExxonMobil Guyana is committed to the responsible development of the country’s natural resources and will not utilize routine flaring during our operations. “We are disappointed by the number of equipment issues experienced and that, because of these issues and COVID-19, commissioning of the gas injection system took longer than originally projected. We took significant steps to limit flaring and are incorporating lessons learned for future projects.”

Over 6,000 personnel were transferred offshore without a safety incident or case of COVID-19 on the offshore facilities. Overall, the Liza Destiny FPSO team has achieved one year and more than one million hours of work without a recordable safety incident

Investment in the local economy continues to increase as the Liza Phase Two and Payara projects advance. Over 2,100 Guyanese support activities on and offshore. ExxonMobil and its key contractors spent over GY $69 billion with over 700 local companies since 2015

The Government of Guyana welcomes the announcement by ExxonMobil that it has reached maximum production of 120,000 barrels of oil per day (bpd) – a success to which it has contributed.

Minister of Natural Resources Hon. Vickram Bharrat said,

“We have been working with Exxon over the last couple of months to ensure we reached maximum production. It is something we have worked for with Exxon and we expect the rate to improve to maximum production.”

Production was below 100 bpd because of the issue with the gas compressor, which resulted in increased flaring. With that being fixed, Minister Bharrat said it has minimised flaring and maximised production. Low output also resulted in only four crude lifts, instead of five.

Guyana banks US$49.341,810 from fourth oil lift

December 28, 2020

Earning a price close to US$49.50 per barrel, Guyana received its fourth one million barrels of oil scheduled for this year and will get its first lift for 2021 in February next year, Vice President Bharrat Jagdeo confirmed.

Since ExxonMobil and partners CNOOC and Hess began production offshore in December last year, this country would have gained US$185,338,324.42 in direct revenue from its oil share sales, and which is held in a Sovereign Wealth Fund, in the Federal Reserve Bank of New York account

“Production was reduced due to the delay in commissioning offshore but we received our fourth lift and we expect the first lift of 2021 to be in February,” Jagdeo said.

“Now that production is stable, we expect the close to 120,000 barrels per day…,” he added, while explaining that lifts will now be more regular and in a shorter timeframe. Guyana had originally been due five lifts for this year but the various challenges faced by Exxon prevented this.

Providing details on lifts so far, government shared data along with monies received, provided in the table below, which reflects Guyana’s share of oil since production began last December.

The Ministry of Finance had said that the total holdings of the Natural Resources Fund as at June 11, 2020 was US$94,921,803.00 representing both royalty and oil sale amounts but announced earlier this month that the second payment for royalties, US$3,698,152.63, had also been deposited.

Minister of Natural Resources Vickram Bharrat had in late August said that over US$150M was now in the oil account, inclusive of royalty payments. Royalties for this fourth lift would not be received until March of next year as it is calculated monthly and paid 30 days after every quarter of the year.

Reeling from the effects of the global coronavirus pandemic that had brought the oil industry into a glut and saw the registering of a negative value for the first time in history, Guyana earned US$35 million for the second lift of one million barrels of oil in June.

The second lift total represented about US$20 million less than what it received for its first cargo in March when it obtained US$55M. By August when it had its third lift, the global economy had begun to return to some normality and Guyana got about US$46 per barrel.

As economies open up and a vaccine for COVID-19 is distributed around the world, Guyana received an even better price, pushing the amount received close to the pre-Covid 19 global prices, which had an average of around the US$56 per barrel in February of this year.

Government hopes that by the time Guyana gets its next lift next year, the amount received would be on par or more than the pre-Covid costs per barrel.

Esso spuds new exploration well on Stabroek Citadel

December 15, 20200

US supermajor ExxonMobil continues exploration and commenced drilling a new well in Stabroek Block. Between December 11 and 22, it is conducting a drill stem test to assess reservoir quality on the Redtail-1 well which found oil in September in one of its most promising hydrocarbon discoveries in the prolific Stabroek Block. The drillship Stena Carron departed the Tanager-1 well site in the Kaieteur block for the new assignment at the Redtail area, in the adjacent Stabroek block, set to conclude at the end of December.

Tanager-1, the deepest well drilled offshore Guyana at over 25,000 feet, where the volume of hydrocarbons does not justify stand-alone development, is thus not financially viable.

The Redtail-1 drill site is located approximately 103 nautical miles from the coast of Guyana and covers an area of one square kilometre. In September, operator ExxonMobil announced that it had hit pay at the Redtail prospect, bringing the total number of discoveries on the block to 18 since 2015. Redtail-1 encountered approximately 232 feet of high-quality oil-bearing sandstone and was drilled in 6,164 feet of water. The well is located approximately 1.5 miles (2.5 kilometers) northwest of the Yellowtail-1 discovery where an additional 69 feet (21 meters) of net pay in newly identified, high-quality oil-bearing reservoirs were detected at Yellowtail-2. Yellowtail is likely to be the 4th development at Stabroek block, targeting 220,000 barrels of oil per day (bpd). If confirmed, it will follow the Liza Phase 1 (120,000 bpd), 2 (220,000 bpd) and Payara Developments (220,000 bpd).

Exxon made five discoveries offshore Guyana in 2019 in the Tilapia-1 well, Haimara-1, Yellowtail-1, Tripletail-1 and the Mako-1 well. The Uaru-1 well in January 2020 was the 16th oil discovery in the Stabroek Block. Liza-1 well accounts for all of Guyana’s oil production which began in 2019 in the Stabroek Block. Guyana lifted its first million barrels of profit oil from the Liza-1 well in February 2020. The Bank of Guyana’s half-year report to the end of June 2020, revealed that Guyana produced over 10 million barrels of oil during the first half of 2020, a brilliant record.

Rio Oil & Gas 2020 digital conference

Dec. 1

ExxonMobil could install as many as 10 floating production, storage and offloading vessels, or FPSOs, at the Stabroek block , Jayme Meier  the company’s manager for deepwater projects told the conference.

“We expect to have five FPSOs in operation in Guyana by 2026 and see the potential for a total of seven to 10 FPSOs.”

Development of the Stabroek block is one of Latin America’s biggest offshore projects, with estimated recoverable resources of over 9 billion barrels of oil equivalent rivaling the largest offshore finds in Brazil’s subsalt frontier. The discovery generated interest in other offshore areas along South America’s equatorial margin. Environmental sensitivity of the region, especially close to recently discovered reefs near the mouth of the Amazon River, creates obstacles to further development. Work on the project continued despite the pandemic, with ExxonMobil and its development partners drilling wells, running supply vessels and pumping oil without a single coronavirus case.

The Liza field pumped first oil in December 2019, with the FPSO Liza Destiny anchored about 190 kilometers offshore in waters about 1,500-1,900 meters deep, Meier said. The SBM Offshore-operated FPSO Destiny has installed capacity to pump 120,000 b/d. Two FPSOs will be added in 2022 and 2024, with the FPSO Liza Unity installed at Liza in 2022 and the FPSO Prosperity installed at the Payara Field. Each of the FPSOs has installed capacity to produce 220,000 b/d.

Lucrative local opportunities

November 29, 2020

ExxonMobil seeks to secure ground transportation services, a major opportunity for local providers to secure the contract. The Cyril’s Transportation Service expanded its operations and transformed an adjacent property into a parking lot. Laws are still to be promulgated to cover provisions for local content in the 2016 Production Sharing Agreement (PSA) with ExxonMobil’s subsidiary, observers note that these invitations provide substantial opportunities for local businesses.

Private Sector Commission (PSC) Chairman Nicholas Deygoo-Boyer said:
“We have locals who are in that sector and I expect locals to win that contract. To be fair to Exxon, they have said that they really are pushing local content and this is evident here. I don’t think you will have an issue that it [this contract] didn’t go to locals.”

ExxonMobil subsidiary Esso Exploration and Production Limited (EEPGL) advertised for the provision and support services for at least 70 vehicles. The company is seeking to identify suppliers who can provide ground transportation and management services for a growing fleet in excess of 70 vehicles.

“These services will include the supply of vehicles for long and short term hire, as well as various personnel such as drivers and dispatch operators, among others. Suppliers must be able to provide systems and tools to manage trips.”

Boyer said that transportation services is an area being capitalised on and pointed to the Georgetown-based Cyril’s Taxi service as a local company providing a large number of vehicles for use.  “Cyril’s Taxi is one of the positives coming out of this area. They have moved from Cyril’s Taxi to Cyril’s Transport and you have others who are also strong in the transportation area. More and more transportation is being done by Guyanese and we hope that grows and grows. We have strong guys. Being commercially competitive and competent and working to bridge any gaps in competency, I know we can do it.”

Prime contractors of ExxonMobil also expressed needs for local transport services. Some companies rent vehicles from locals at daily rates for the long-term use of their employees.

“The foreign employees coming here do not want to purchase vehicles and have the headache of maintenance and all of that. They find it easier to rent”, one business person, who rents his fleet of five vehicles said.

Boyer said that as the umbrella body for the business sector, the PSC advocates to help members and budding entrepreneurs understand the oil and gas industry. Support is provided as members are advised what they need to do to get involved, such as where to get registered and the documentation they will need. One of the criteria for all bidders is that they must be registered with the Centre for Local Business Development (CLBD), set up by ExxonMobil as an intermediary for local companies interested in providing goods and services for the oil major.

CLBD Director Patrick Henry said of the transport advertisement: “This is one of those opportunities in allowing local companies… outside of the technical areas to access opportunities and bid and work and grow with the sector, for larger work throughout. It is an opportunity to take advantage of.”

The agency has seen increased registration and more persons are taking advantage of the training programmes provided online. The information is advertised through the CLBD portal.

“If they need we can help them walk through. Then it is up to the companies to express and follow the procurement process. The centre has procurement seminars we run it every month and we continue to get large amount of participants.”

Since the COVID pandemic, the agency has been doing all of its training and support online via its CLBDGuyana.com portal.  Covid has not deterred locals from registering or participating in the online classes offered by the centre which was pleased with the response.

“We have everything online and we have been doing everything virtually. Our courses are full more now during Covid. Everybody is on time, they are there for three four hours and people stay through and participate. Guyanese businesses have really adapted.”

One of the plans for the centre this year was a programme for its members that facilitates access to financing from financial institutions as that has been a complaint of many small businesses.

Since it began operations here ExxonMobil and its key contractors have spent over $65 billion. “As of the first half of this year, over 2,000 Guyanese were supporting project activities on and offshore including the 24 operations and maintenance technicians who returned from training abroad this year and have begun their work on the Liza Destiny.

“ExxonMobil and our key contractors have spent over GYD $65 billion with more than 700 local companies since 2015.”

Webinar: “Market Updates – Doing Business in Guyana Event.”

Opportunities in Guyana’s Natural Resources Sector with a focus on Oil and Gas Development

Hon. Vickram Bharrat MP, Minister of Natural Resources :

December 09, 2020

Members of the International and Diplomatic Communities, senior representatives of various oil and gas companies, distinguished speakers and fellow participants, members of our Caribbean Community and the Diaspora, ladies, and gentlemen, it brings me great pleasure to address you.  At the onset I would like to state that Guyana is known for many things, but what stands out most is its abundance of natural resources as almost seventy-five percent of the country is covered with natural vegetation. In mineral exploration there is a high occurrence of bauxite, gold, diamonds, rare earths, coupled with arable land, freshwater and recently our enormous proven oil and gas resources. Thus, it must be emphasised that natural resources are an important source of our national wealth. As such, there is a direct linkage between natural resources and economic growth, through saving and investment for emerging economies such as Guyana. I would like to reiterate that Guyana is pro-investment and will continue to remove hurdles to create more opportunities for investment across all sectors.

The oil and gas sector is a new industry for Guyana but its importance cannot be understated. I say proudly, so far there have been approximately 9 billion oil equivalent barrels discovered offshore, which will positively impact the livelihood of every Guyanese and modernize the landscape of Guyana. To ensure that Guyana attains maximum benefits from this new industry, government is committed to robust monitoring and management of resources from the oil and gas sector. One enabling factor is a Local Content Policy, which will transform into investment and economic opportunities, not only for Guyanese, but also new avenues for partnerships with foreign investors.

As such, we are deliberately working closely with local businesses, international companies, investors, and the oil and gas companies to have local content policy and regulation developed, implemented, and regulated at every level. This will enable my Ministry and the Government to identify and evaluate strength and weakness and hindrances to realize economic opportunities in oil and gas development. This will be propelled by accountability and transparency with a legislative framework which would ensure economic success for investors, the country and its citizens.

Government has completed a desktop review on the feasibility to bring gas to shore from the Liza 1 field in the Stabroek Block. estimated to produce between 30-50 million cubic feet per day of natural gas. This project is expected to supply nearly 70% of current energy demand, reducing dependence on imported fossil fuel. President Irfaan Ali appointed a Special Advisory Committee which is currently conducting studies to validate the most suitable location, access to grid and availability of land with the Expressions of Interest for potential investment in early 2021.  Most importantly, our Gas to Energy agenda envisions the transformation of cheap,  reliable and clean energy not only for domestic use but for processing, manufacturing, and other value-added downstream activities. This in effect will make Guyana a hub for a variety of industries for the supply of goods and services globally.

In addition, gas to energy will not only bridge the gap between the new oil and gas sector, but enhance l traditional sectors, such as enabling our local farmers to add value to their produce for export. New sectors can also be developed resulting from Guyana’s gas to energy development.   Moreover, development of the petroleum sector of this economy, will focus on the growth of the macroeconomy. Guyana is a dynamic and integrated economy, and the advancements of the oil and gas sector will allow the integration of economic activities for all other sectors of the local economy. The emerging hydrocarbon economy is already allowing for the growth of our local private sector, as well as a greater influx of foreign direct investments.

From the moment of the first oil discovery, the entire business sector has been rapidly changing to facilitate greater investments. It is for this reason that the Administration is focusing on strong institutional and regulatory frameworks to encourage both foreign and local investors. We are working tirelessly with all stakeholders and partners to bring Guyana to the level of a sought after investment destination. This is being done not only for the oil and gas exploration, development and production, but also for all related services and goods that can be produced and sourced from our host nation.   Therefore, it is the mandate of this government to provide the necessary incentive to grow the business community by providing opportunities for development of local supplies chains of the oil and gas sector. Guyana is an open economy that is ripe for active investment in all aspects of the value-chain of the petroleum sector. We are looking for investors to be here and set-up operations with our local private sector in the areas of human resources development, skills and technological transfers, manufacturing and industrial activities, commercial and financial services, as well as hospitality and leisure services.

Hence, our natural resources must be seen essentially as an exogenous factor that can improve economic growth through macroeconomic channels as well as through business institutions. Our huge natural resource rents, especially in conjunction with well-defined property rights, correct markets and improved legal structures for an emerging market economy, we are now seen as, will lead to flourishing business behaviour on the part of producers, thus encouraging socially fruitful economic activity. The combination of abundant natural resources, growing markets and better legal structures will have quite an inspiring consequence for business development which will drive the competitiveness of Guyana’s economy. Resource abundance development will have a direct effect on private and public incentives to save and invest and thereby improve economic growth.

Moreover, we are a very careful country, as is the case in most countries that are rich
in oil, minerals and other natural resources. Economic growth over the long haul tends to be slower than in other countries that are less well endowed. We are natural
resource rich and we are working to becoming a natural-resource wealthy country.

This can only be achieved with good governance by us and stronger investor  elations for doing business in Guyana.

 

Guyana Oil & Gas Summit

December 2, 2020

Companies urged to embrace innovation and creativity to compete efficiently
(December 1, 2020) His Excellency Dr Irfaan Ali has reaffirmed his Government’s commitment to ensure that local businesses are optimally involved in the oil and gas sector.

The Head of State made this assertion during his address at the Virtual Guyana Oil and Gas Summit this morning. The two day event will allow for online networking with Guyana’s key stakeholders in the Energy Sector.

While President Ali noted that the emergence of the oil and gas sector will result in an explosion of opportunities in our country, he said that it will also require investment, technical skills and capacity on an unprecedented scale.

“We are developing a Local Content Policy and Law which will promote local participation in the sector. The policy is being developed through a consultative process, including through the examination of best practices around the world.”

ECONOMIC OPPORTUNITIES

The President stated that while Foreign Direct Investment is essential for capitalising on the opportunities which the sector promises, it is also vital in building the capacity of the local sector.

“Guyana therefore welcomes foreign investment to help us acquire the capital, the skills and the technology to convert economic transformation into economic opportunities.”

The President said that since oil and gas will move Guyana’s development trajectory to a higher level, which represents a “paradigm shift in our country’s development” local companies must embrace new ways of doing business.

“The old culture of ‘buying and selling’ must give way to one which emphasises production of goods and services and partnering with others to maximise local traction in the sector. Local firms must become bold and ambitious – they must think big and think international. They must embrace innovation and inventiveness if they are to compete effectively in the global economy.”

The Oil and Gas Summit, he added, provides an opportunity to begin preparations for the new economy by highlighting the investment opportunities in Guyana. It also offers local investors the opportunity to establish synergies, build capacities and forge strategic partnerships.

“I assure all that my Government is supportive of investment – foreign and local. We are working to ensure a more enabling environment to boost business in Guyana.”

The President commended CWC, Global Future Energy Limited and the Georgetown Chamber of Commerce and Industry (GCCI) for their partnership in organising the summit, which he acknowledged is an expression of confidence in Guyana’s future.

All speakers and participants of the summit were remotely connected through an online platform and  had access to a unique programme and high-level networking.

The delegates actively participated in the event through engaging functions, including polling, Q&A, live chats and one-to-one meetings.

The virtual event  set the scene for the Industry’s development in 2021, where participants will be given the opportunity to meet with existing and new contacts, explore the latest policies and guidelines and develop new solutions to advance projects in Guyana.

Other speakers during the two day Summit included Hon Vickram Bharrat, Minister of Natural Resources, Hon Deodat Indar, Minister within the Ministry of Public Works Responsible for Management of Energy Sector, other government officials, Hon David Abiamofo Minister of Natural Resources (Suriname), members of the Diplomatic Corps, representatives of the GCCI and key stakeholders in both the local and international oil and gas sector.

Ambassador Lynch addressed Oil & Gas Summit

Remarks by Ambassador Sarah-Ann Lynch
Guyana Oil & Gas Summit (Virtual)

December 2, 2020

I don’t have to delve too deeply into how much opportunity there is in Guyana. The IMF projects Guyana’s economy will grow by 26.2% in 2020. In 2019 the country’s GDP was $4.2 billion and by the end of the year it is projected to grow to $5.3 billion, making it the fastest growing economy in the world.

Guyana is on track to become the second or third largest oil producer in the western hemisphere over the next 20-40 years. This truly is a unique situation: that a country of just 780,000 people discovers vast offshore deposits of high-quality oil, within five years begins extracting those deposits, and will – in short order – be mentioned in the same breath as Mexico and Brazil as the second or third largest oil and gas producer. Exxon’s discoveries in 18 of its 21 exploratory wells is incredible. The sheer number of oil barrel equivalents offshore – now 9 billion and still rising – is staggering.

And what does that mean? That means that Guyana is open for business. Obviously, the biggest draw is in the oil and gas sector, particularly in exploration and services. But there are also significant opportunities in the renewable energy, financial, construction, and agricultural sectors. Guyana and the private sector must capitalize on this. If Guyana can advance from being a raw material producer to exporting more value-added goods, it will capitalize on a needed diversification of its economy. This will enable it to avoid the dreaded “resource curse” that has plagued many developing countries with newly discovered natural resources.

And the United States is here to help. As part of Secretary of State Mike Pompeo’s historic September 17 visit to Guyana, Guyana signed onto the Growth in the Americas initiative. This agreement provides a framework to promote private sector investment in finance and procurement, infrastructure, and energy security. It will also lay the groundwork to implement global best practices in policy, legal, regulatory and investment frameworks. As part of this bilateral collaboration we plan to establish a Working Group with the Government of Guyana to develop the foundation for partnership in these key areas. Less than one month after the Secretary’s visit, a six-agency delegation led by the International Development Finance Corporation, or DFC, came to Guyana further highlighting the U.S. Government’s support of economic growth and security cooperation in the region. This visit further illustrated our commitment. U.S. government officials met not only with Guyanese leaders but also the private sector, and outlined opportunities for U.S. government project financing through public private partnerships.

But this commitment is not new. The United States has a long history of working with Guyana to develop enabling environments for responsible development of energy resources. From 2010-2018, the Department of State’s Energy Governance and Capacity Initiative, or EGCI, supported Guyana’s government in its efforts to manage its upstream oil and gas sector effectively and responsibly. Even a decade ago, the Department of State recognized the need for the necessary regulatory, legal, and policy structures to ensure sound governance and sustainability in this sector. With EGCI assistance, we provided Guyana with international best practices in how to organize its energy sector and manage its revenues. With U.S. assistance Guyana was also able to initiate the process to join the Extractive Industries Transparency Initiative, EITI, to ensure the public knows where oil revenues are going.

With a new government in place, Guyana knows that it will have to move quickly in order to show both its citizens and the world that it is ready for the immense transition underway. It will have to make significant outlays in its power generation sector in order to attract the types of investment that will make it a sought-after destination in the Caribbean. One of the biggest obstacles is the cost of energy. Guyana’s energy generation is largely fossil fuel-based, with power plants utilizing heavy fuel oil. The cost of electricity is USD 0.32 per KWH, which is significantly higher than Guyana’s South American neighbors but about average for the Caribbean. Guyana also knows it will have to improve its power grid, which, unfortunately suffers from systemic losses. This is a major roadblock for the development of large industries now. If Guyana can take advantage of the natural gas that emits from the oil wells, it can bring down the cost of energy two-fold, which will make a difference in the lives of every Guyanese citizen.

Guyana is also working on reforming its financial sector to attract investment. The Minister of Legal Affairs committed to amend existing legislation to allow for the development and diversification of the existing financial sector. Guyana’s currency is stable and local banks are highly profitable and continue to grow. International companies will look for this stability and reform as they evaluate Guyana as a place to set up operations.

In addition to regulatory reform and improving the energy grid, diversification in the energy sector will help Guyana fulfill its dream of a green economy. The Ali administration committed to create an additional 400 MW of power generation within the next 5 years. The Minister of Public Works highlighted solar energy parks and micro-grids as a part of the Government’s plan for hinterland community development. The Guyana Energy Agency just signed a deal for two solar farms in Lethem and Bartica which will provide much needed energy for those areas.

Finally, there are a slew of large infrastructure projects the Government of Guyana intends to put out for tender in the coming weeks and months. The Ministry of Public Works has announced two large RFPs: a $150 million high rise, four lane, Demerara Harbour Bridge, and the construction of four international hotels. The Government is expected to announce tenders for new highway construction and road expansion projects, a gas to shore power generation plant in or near Georgetown, and a deep-water port.

These are all sweeping changes and it will be crucial for the government, in concert with international partners, the private sector, and civil society to get it right. The United States is committed to Guyana’s prosperity for all Guyanese, and our stance with regard to Guyana’s political stability over this past year should not leave any doubt that we take our values – fairness, transparency, accountability, and the rule of law – seriously. When you attract investment from U.S. partners, you get quality, you get sector specific experience, and you get a transparent deal. As Guyana moves forward on this oil and gas path, the perception that it holds these values in high regard makes a difference to U.S. investors and the international community. It is important that contracts are honored, laws are followed, reforms are real, and that the government is accountable to its people – all of its people.

The need for modern legislation and regulations that reflect those values is paramount to continue along the road toward prosperity for all Guyanese. The Guyanese I’ve spoken with, from all walks of life and all demographics, want a peaceful and prosperous country for their children to grow up in. They want a secure and stable region. And who doesn’t want those things? They are what everyone deserves, regardless of race, religion, sexual orientation, ethnicity, gender, or disability, it doesn’t matter. These are things that Guyanese citizens deserve, and that is what the United States stands for in our partnership with all of you.

Thank you for your time today, and I wish you a productive rest of the Guyana Oil and Gas summit. Thank you.

[ By U.S. Embassy Georgetown | 2 December, 2020 | Topics: Ambassador, Speeches | Tags: Energy, Oil and Gas  ]

 

Minister Indar -Petroleum can lead investment in non-oil sectors

December 1, 2020

Hon. Deodat Indar, Minister in the Ministry of Public Works, told Guyana Oil and Gas Virtual Summit that the oil and gas sector provides investment opportunities for the non-oil sectors.

The summit, organised by CWC, Global Future Energy (GFEn), the Georgetown Chamber of Commerce and Industry (GCCI) and other partners, aims to foster networking with Guyana’s key stakeholders in the energy sector. Since the 2015 discovery of Guyana’s vast petroleum basins, the country has attracted global attention. This also provides an opportunity for investors to capitalise on opportunities in the non-oil sectors, the Minister said:

“I believe that these are not just discussions, the ideas generated here can be shared among companies. Those who are already in Guyana and those who are yet to come, can understand the opportunities even if they are not directly oil and gas related,”

Minister Indar said during the course of the two-day summit, he hoped stakeholders  would  discuss some of those areas.

“The extractive industry alone may not be able to sustain a country over a long term. The other sectors that are more labour intensive like agriculture and tourism and hospitality, those are sectors that are more sustainable and it is our plan in Government that those sectors receive similar amount of interest just as the oil and gas sector.”

The summit from December 1 to 2, 2020.provides a platform for Government officials, experts and the private sector to discuss investment opportunities and best practices in the oil and gas sector. To date, Guyana has 19 oil discoveries offshore. CWC/Global Future Energy Limited (GFEn) is a world-leading events producer and training provider for energy and infrastructure.

 

Changing of the guard

Dec 14, 2020

Global Affairs Canada, the country’s foreign affairs office, announced appointment of Mark Berman  as the High Commissioner of Canada to Guyana and Representative to the Caribbean Community (CARICOM).

He succeeds Lilian Chatterjee who said,  “Canada is pleased to announce Mark Berman as Next Canadian High Commissioner to Guyana.” Her credentials were accepted in 2017.. She, with American and British diplomats, played a pivotal role in preventing destabilization of democracy by de facto despots in the five-month election farrago. ECO sends best wishes in her new post as High Commissioner to Barbados.

Berman has a Bachelor’s Degree in Political Science and International Relations and a Bachelor of Laws from the University of Saskatchewan. He has a Master of Laws from the London School Economics. Berman began working with the Canadian government in 1989 as advisor to the Minister of the Environment and then was executive assistant to the Deputy Minister of the Environment.

Berman later served as a legal officer at the UN Environment Programme in Kenya, a director in the Office of the Commissioner of the Environment and Sustainable Development in Canada, deputy director for Human Security and Peacebuilding at the Canadian International Development Agency (CIDA), and director for Climate Change Negotiations at Environment Canada. Later, he was seconded to CIDA’s Multilateral Branch as acting director general for Environmental Sustainability and Economic Growth, then served Foreign Affairs and International Trade Canada as executive director for Climate and Energy and Canada’s representative on the Kyoto Protocol’s Compliance Committee. Berman became director general of Consular Policy at Global Affairs in 2017, where he remained to the present date. ECO welcomes High Commissioner Berman to CARICOM. His Excellency Mark Berman is expected to arrive in Guyana in January 2021 and will function as Canada’s Representative to the Caribbean Community.

In the interim, Counsellor for Development Cooperation at the High Commission, Janine Cocker will function as Chargé D’affaires until the new High Commissioner takes up his position.
This was revealed during a courtesy call by outgoing High Commissioner Chatterjee on the Prime Minister who expressed gratitude for her dedication to Guyana throughout her tour of duty, especially for her commitment to democracy and her unwavering support for the democratic process to be maintained during national elections.

The outgoing High Commissioner assured the Prime Minister that Canada will continue to work to build and maintain its excellent relationship with Guyana.

“We spoke about all the various sectors where we have provided support in the past and are willing to work with the Prime Minister to do so in the future.”

 

Canadian technical expert re-hired

December 13,

Outgoing Canadian High Commissioner Lilian Chatterjee announced that the Government of Guyana re-hired former Canadian politician Alison Redford for more work in the petroleum sector.

“They [the Guyana Government] were looking for technical assistance. We identified her and they were very happy. They have since brought her back for other things and intend to work with her on future projects. But I don’t know more than that. I just know that they were very pleased with her and her team’s performance.”

Canada offered further electoral aid

Chatterjee says democracy tested but prevailed during elections controversies

December 6, 2020

Canada pledged further support to electoral reforms and awaits the government’s response, outgoing High Commissioner Lilian Chatterjee announced as she reviewed events in the aftermath of the March 2nd poll, including a meeting where the deposed president heard that Western countries rejected the now discredited initial declaration intended to keep him in power, overturning democracy.

The Canadian envoy, who will take up the post of High Commissioner to Barbados from January, said that in her 17-year career as a diplomat she never witnessed an election filled with trauma and frustration as she did here and hopes to never again see a repeat at any of her future postings.

“Canada spent Cdn$1 million on your electoral process. We did three things. We funded the Carter Center. The chairperson needed elections expertise because she was new to this role… so we offered Jean Pierre Kingsley [former Chief Electoral Officer of Elections Canada] … and we supported the CARICOM team,” Chatterjee said in an interview at her Bel Air Gardens residence.

 

Guyana -Canada Chamber of Commerce.

 4 December 2020,

“Many oil-producing countries in the Middle East understood that. So you should accept that others – and I suspect they will be mostly your geographic neighbours from CARICOM and the Americas…to support your growth at the outset until Guyana can supply the skilled workforce it needs. Even today, Canada welcomes immigrants to provide the skilled workforce we need to fuel our growth. Don’t resist foreign investment but use your judgement on who you can trust.”

Guyana has over the years been attracting interest in its oil and gas sector from the United States, Canada, Mexico, Argentina, Trinidad & Tobago and Brazil. The Canadian envoy, whose mandate includes searching for business opportunities for her country, assured Guyana that Canada was not now reaching out opportunistically because of the huge oil reserves.

“We will not flood you with an influx of Canadian employees. We will provide Canadian expertise but in order to have true partnership, Canadians will rely on training a skilled workforce in Guyana. But let me be clear: that workforce does not exist right now in Guyana. You do not have the population yet to be the engine of your rapid growth.”

Government offered 20,000 scholarships for study online at the University of Guyana, University of the West Indies and other institutions. President Ali said his administration was ready to engage the Guyanese Diaspora, but they must be ready to take advantage of opportunities

. “The Diaspora also has to be ready and willing to engage and to come back. Yes! There will be risks. I’m not standing here to tell you everything is smooth and beautiful. .. Where there is no risk there will be challenges but don’t say you want to be part of the development and list a thousand challenges why you want to be there, then you’ll never be there.”

Canada estimates that the Diaspora is about 200,000 persons. Many found employment in the Trinidad oil industry, like the foreign workers who already propel growth in Guyana.

 

GO-Invest attracts investments of $272.6 Billion

December 11, 2020

The Guyana Office for Investment (GO-Invest) generated investments to the tune of $272.6 billion between August and November this year. Some 9,986 job opportunities should be realised when the 55 investments across all sectors become fully operational. Chief Executive Officer (CEO), Dr. Peter Ramsaroop, said the Agency continues to build investors’ confidence and promote development opportunities, bringing lasting benefits to Guyanese. Of the 55 investment projects, 28 are local, 25 Foreign Direct Investments (FDIs) and two joint ventures. FDI agreements are predominantly within the tourism and services industries and light manufacturing services.

“The Guyana Office for Investment received a total of 30 proposed hotel projects which included hotel brands such as the Hilton, Hyatt, Best Western, Holiday Inn, Marriott and Radisson. The joint venture agreements executed were in the manufacturing sectors. Nexus Machining is partnering with Machine Tech Inc. out of Louisiana, USA and GUYSONS Engineering partnering with K + B Industry Inc. also out of the USA.”

Investors projections show the value of the FDI projects totalling some $239 billion and joint ventures, $5.3 billion. Investors figures peg the value of local investments for the period August to November at $27.9 billion, primarily in the agriculture, tourism and services sector. These projects are projected to create at least 1,752 jobs when fully operational.

Notable local investments include Royal Chicken Incorporated, projected at $531.2 million. Other local projects include John Fernandes Limited providing services to the oil and gas industry and ZECO Industrial Engineering.

“Despite the global pandemic, our export department continued to work with our exporters. The Agency matched 34 local businesses with overseas clients. These were involved in the supply of sugar, teas, prefab houses, straw mats and wooden furniture to Trinidad, St. Lucia, London and Barbados.”

GO-Invest facilitated participation of seven Guyanese companies in the first virtual trade show in the Caribbean, the Trinidad International Convention (TIC) 2020 hosted by Trinidad and Tobago Manufactures’ Association on October 28- 30 and November 11-14, 2020.

The agency continues to work with other government agencies, including the Ministry of Foreign Affairs, the Ministry of Housing and Water, Guyana Lands and Surveys Commission, the Ministry of Finance through the Guyana Revenue Authority, the Ministry of Tourism, Industry and Commerce, Guyana Tourism Authority and private sector organisations.

 

Growth in the Americas

December 11, 2020

The inaugural US-Guyana Growth in the Americas Working Group held its first meeting virtually on December 11, 2020. The meeting is a product of the Growth in the Americas Initiative Memorandum of Understanding (MOU) signed by US Secretary of State Mike Pompeo and Guyanese Minister of Foreign International Cooperation Hugh Todd on September 18, 2020 in Georgetown. The MOU aims to facilitate bilateral collaboration in the areas of finance, energy and infrastructure, and identify ways to catalyze private capital for programmatic and project-specific investment opportunities. It further seeks to address technical, regulatory, structural, systemic, economic, and financial obstacles, and propose solutions intended to attract the investment necessary to advance Guyana’s prosperity.

According to the US Embassy, at the inaugural Working Group Meeting, Guyanese government representatives discussed key needs in finance and procurement, energy and power generation, physical infrastructure, information technology and housing. US representatives described the technical assistance the US government was able to provide in these areas as well as Sovereign Wealth and Public Finance Management to ensure that Guyana’s regulations and business climate stimulate domestic and foreign investment.

The United States delegation was headed by NSC Senior Director Josh Hodges and Treasury Assistant Secretary for International Markets Mitchell Silk. The US delegation included representatives from the Departments of State, Energy, Commerce, Transportation, the US Trade and Development Agency, USAID, the Development Finance Corporation, the National Security Council and the US Embassy in Guyana.

Vice President Bharrat Jagdeo led the Guyanese delegation which included representatives from the Ministries of Foreign Affairs and International Cooperation; Public Works; Natural Resources; Housing and Water; and Tourism, Industry and Commerce, as well as representatives from the Guyana Revenue Authority, Guyana Power and Light and the Telecommunications Agency in the Office of the Prime Minister.

 

EPA approves private Exxon fibre-optic cable from Liza 1

November 30, 2020

Esso Exploration and Production Guyana Limited (EEPGL), Exxon’s subsidiary, sought environmental authorisation from the Environmental Protection Agency (EPA) for a fibre-optic cable from its Floating Production Storage and Offloading (FPSO) vessel to onshore.

The application, submitted by Country Manager Alistair Routledge,  progressed to the point where the EPA deemed the proposed project to have no environmental impact and exempted the oil company from submitting an Environmental Impact Assessment (EIA).
“In accordance with Section 11(2) of the Environmental Protection Act, the application for the project listed above has been screened by the agency to assess the potential environmental impacts”.
“It has been determined that the project will not significantly affect the environment nor human health and is therefore exempt from the requirement for an Environmental Impact Assessment.”

EPA invited persons with a contrary view to lodge an appeal against the agency with the Environmental Assessment Board at its office, within 30 days of the publication of the notice.

EEPGL’s cable will run from the Liza field offshore Guyana to the Ogle beach manhole. In the first phase, planned for the 2020 fourth quarter, civil construction work will begin onshore, followed by a connection to the Liza phase 2 project in 2022 and connection, once approved, to the Payara field.

In its project summary report, Exxon explained the cable will ensure a high-speed data connection between its offshore platform and its office in Georgetown.

A geophysical survey gathered data from the field in order to plan the route. The cable will be plough buried through fishing grounds to protect it from fishing trawlers, while onshore it will be connected at a predetermined site – proposed to be in the vicinity of the Pegasus Hotel.

The fiber optic cable which will allow Guyana to monitor Exxon’s operations offshore is expected to be laid by the third quarter of 2021, so that Guyana can monitor Liza Phase One operations.  ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), according to a project summary published by the Environmental Protection Agency (EPA), “proposes to construct the Project starting in Q4 2020) and ending in Q3 2021…”

The company’s intended high-speed fiber optic/wireless transport service will connect its onshore and offshore facilities.

The summary states, “This connection will establish a foundation for high-speed / low latency connectivity of onshore and offshore facilities to Guyana foundation infrastructure, allowing implementation of digital technology to improve productivity (field access data and planning), support remote operations, and support reliability (process monitoring and inspection).”

Guyana Revenue Authority (GRA) will make use of this facility to monitor Exxon’s offshore operations. The tax agency would have a CCTV system set up, following the installation of a fiber optic cable, to allow the authority monitor the operation 24/7.
The agency had to rely heavily on vessels which come to shore,, to report on activity offshore, through various forms, utilizing regulations in the Customs Act. GRA had also contemplated manned presence on the oil vessel(s) at all times, but it is unclear whether that was ever achieved.

In November last year, GRA had advertised that the Liza Destiny Floating Production, Storage and Offloading (FPSO) vessel had been appointed a sufferance wharf and private warehouse, pursuant to the Customs Act issued under Section 2 and Part 4 of the Act.

A sufferance wharf is a place other than an approved place of loading and offloading by the Revenue Authority, where a senior customs officer may by discretion and under certain conditions, allow the loading and offloading of goods. That subjects the Liza Destiny vessel to all customs regulations which concern sufferance wharves. It is the appointment that gives GRA the authority to conduct its surveillance. Following the installation of the connection to the Liza Phase One operation, Exxon intends to connect to the Liza Phase Two operation in 2022 when the project comes on stream. It also intends to connect to the Payara area in 2023, expected to come on stream in 2024.

Guyana, with oil giant ExxonMobil as the operator, began producing oil in 2019 in the Stabroek Block, lifting its first million barrels of profit oil from the Liza-1 well in February 2020. Oil tanker Cap Phillippe transported this lift from the Liza Destiny FPSO vessel, allowing Guyana to receive its first payment the next month. The Bank of Guyana’s half-year report, to the end of June 2020, revealed that Guyana produced over 10 million barrels of oil during the first half of 2020.

Production, beset with the problems of the COVID-19 pandemic, fell short of the targeted production figures. According to the report, Guyana was able to produce 12.3 million barrels of oil, at an average of between 65,000 and 75,000 barrels of oil per day.

First oil revenue-based earnings from production in the Liza field, some $11.4 billion, was deposited in the Federal Reserve Bank of New York in March of this year. An additional sum of $7.3 billion was subsequently deposited, as well as royalty payments.  Guyana has received three cargo lift payments and three royalty payments courtesy of the Liza-1 well. Guyana’s fourth crude lift was been delayed to next month, due to lower than projected production.

 

Pentagon blacklists CNOOC due to military links

Shi Weijun
Beijing
22 December 2020 PE

Escalation could lead to PRC NOC exclusion from US-dollar-based financial system CNOOC, China’s main offshore energy explorer, faces the risk of sanctions from the administration of outgoing US president Donald Trump after the Pentagon added the NOC to a blacklist of companies with alleged links to the PRC military.

Official blacklisting of CNOOC by the US Department of Defense in early December confirmed days of speculation that the company was in Washington’s crosshairs, and marked the first time one of China’s three NOCs has been directly embroiled in the geopolitical fight between the two superpowers. There is no sign for now that the other two companies, CNPC and Sinopec, will also be blacklisted.

Shares in CNOOC’s listed unit in Hong Kong slumped by c.12% following the blacklisting—their worst weekly performance since the oil price crash in March—as spooked US shareholders reduced their positions in light of the greater political risk. The unit stated at that point that it is “comprehensively assessing the impact of the situation on the group”. The share price remained stable in the weeks following the plunge.

The addition of CNOOC to the entity list exposes it to the risk of more punishing sanctions
The Pentagon did not say why it added CNOOC to the blacklist, but it is likely because of the company’s activities in the South China Sea, which is believed to be rich in energy deposits and marine resources but carries major geopolitical risk from maritime border disputes.

Beijing claims most of the South China Sea and its resources based on its so-called nine-dash line, but many of its Asia-Pacific neighbours—including Vietnam, the Philippines, Malaysia and Brunei—hold opposing views.

CNOOC is the only Chinese operator in the South China Sea. The company’s Hong Kong-listed subsidiary increased production from the area in the first nine months of 2020 by 13.3pc year-on-year, to c.123mn boe.

In 2014, CNOOC deployed China’s first deepwater drilling rig to drill two wells in the South China Sea near the Paracel/Xisha islands—which Vietnam alleged was a provocation. The move sparked a dangerous standoff, including nationalist protests in both countries and sparking clashes between Vietnamese and Chinese fishing vessels and coastguard ships around the site of the rig.

Trump signed an executive order in mid-November that bars US investors from buying or owning securities of the companies blacklisted by the Pentagon. The addition of CNOOC and three other companies to the blacklist raises the total number of companies to 35. The order takes effect on 11 January and gives US investors until 11 November 2021 to divest their holdings in the companies. In the case of CNOOC, this would appear to include its two listed subsidiaries, CNOOC Ltd and China Oilfield Services Ltd. Around 17.5% of CNOOC Ltd was owned by foreign institutional investors at the time of the blacklisting—of this free-floating share, US investors held 18.5%.

The addition of CNOOC to the entity list exposes it to the risk of more punishing sanctions, including a ban on American companies or individuals doing business with it unless specific waivers are given.

13.3% – Year-on-year increase in CNOOC’s production
The worst-case outcome would be prohibiting CNOOC from US-dollar-denominated financing through US institutions, which would mark an Iran-level escalation and likely deal a life-threatening blow to the NOC by effectively shutting it out of the US financial system.

These additional sanctions remain remote for now, partly because oil and gas is less sensitive and strategic an issue than technology, the internet and 5G—which the US has sought to target. The decision to hit CNOOC rather than a more obvious political target such as its far larger peer, CNPC, suggests that Washington does not want to take overly drastic actions either.

CNOOC has the largest overseas footprint of China’s three NOCs, with operations in 19 countries including the US, Canada, UK, Guyana and Brazil. The US accounts for c.6pc of CNOOC’s total production and reserves, according to Swiss investment bank Credit Suisse.

 

Blacklisted CNOOC may divest Guyana asset

11/30/2020 (Bloomberg)

The U.S. Department of Defense blacklisted China National Offshore Oil Corp. , PRC’s third-biggest oil company which could spur major outflows from its Hong Kong-listed unit, after years of involvement in offshore drilling in disputed South China Sea waters. Esso Guyana would be wise to buy out the 25% share in Stabroek Block owned by the communist nation’s main deepwater explorer.

Divestment presents an opportunity for Guyana-Suriname players to enter the Stabroek Citadel in a joint venture – Tullow, EcoAtlantic, CGX, Frontera, Westmount, Cataleya, Ratio, Mid-Atlantic and JHI. Among four companies added to a list of firms
owned or controlled by the military PLA in hard-line moves against Beijing in the final weeks of the Trump administration, CNOOC awaits official notice from relevant U.S. government agency, the unit said in Hong Kong.

“The company is closely monitoring the development of the situation.”

CNOOC is the smallest of the big three state-owned oil majors after China National Petroleum Corp. and China Petrochemical Corp.,( Sinopec). CNOOC operations in the South China Sea have run into controversy and have come under the US radar because PRC claims drilling rights in waters far from its borders, and within 200 miles of Vietnam and the Philippines in the South China Sea, where PRC made extensive territorial claims.

“…it’s CNOOC that got targeted, and not CNPC or Sinopec, because of its drilling in the South China Sea area, which is deemed as so-called military actions by the U.S.,” said Lin Boqiang, at Xiamen University.

U.S. investors held 16.5% of the shares in CNOOC’s Hong Kong-listed unit, creating potential for major outflows if they divest. U.S. asset managers Vanguard Group and BlackRock Inc each own about 1% of shares of CNOOC’s listed unit CNOOC Ltd, President Trump signed an executive order order on 12 November barring American investments in firms owned or controlled by the PLA. The unit, CNOOC Ltd., fell 14% on the threat.

The order prohibits “any transaction by any United States person in publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of companies with alleged ties to the Chinese military as defined in the executive order”.

The prohibition in the executive order is subject to certain divesture and other exemptions.

CNOOC has an international oil and gas portfolio with assets in US oil and gas fields, partners on international projects with companies like Exxon Mobil Corp. and Hess in Guyana and with Total in Uganda. It uses American technology and equipment, so disruption would have a massive impact. CNOOC may have taken pre-emptive steps to protect itself. In October, it amended its non-compete clause to allow the listed unit to transfer assets to its parent, to avoid political risk if the blacklist escalates into sanctions.

CNOOC Limited “is comprehensively assessing the impact of the situation on the group and will close monitor relevant follow-up developments” and make further announcements as appropriate in accordance with its Hong Kong Stock Exchange listing rules.

3 million Hong Kong citizens may soon enter Britain following security tensions. Unless the Western democracies stand firm against PRC hegemony, the world, weakened by zoonotics from PRC and AU, will succumb.

CNOOC has been at the center of territorial disputes in the South China Sea since 2012, when it invited foreign drillers to explore blocks that Vietnam had awarded to companies including Exxon Mobil and OAO Gazprom. In 2014, the countries traded accusations that their boats had rammed vessels, including around a CNOOC oil rig near the Paracel Islands.

The Philippines in October resumed oil exploration in the South China Sea for the first time since 2015, when it filed a case with the Permanent Court of Arbitration over the disputed waters. The resumption came after Manila and Beijing reached agreement for joint exploration. Philippine firm PXP Energy Corp. is in talks with CNOOC for partnership.

CNOOC is rapidly expanding footprints in South America as PRC militarises the Indian Ocean and encroaches on Indian Himalayan territory.