Guyana and USA sign US$2B MoU

July 28, 2022

The historic US$2 billion Memorandum of Understanding (MOU) signed between Guyana and the US EXIM Bank will have a lasting transformational impact on Guyana. The agreement was signed in Washington D.C, between Minister of Foreign Affairs and International Cooperation, Hugh Todd, MP and president of the EXIM Bank, Reta Jo Lewis.

Guyana will benefit from direct loans and medium and long-term guarantees, to finance US exports to Guyana for government projects on infrastructure, energy, water and sanitation, Information and Communications Technology and food security.

Senior Minister for Finance, Dr. Ashni Singh said that the US remains a major global economic player and provided support to Guyana in a number of areas ranging from economic to the protection and preservation of democracy.

“The sheer scale and magnitude of the US$2 billion is by no means a small amount of money. Two billion dollars is at a scale that could really have significant and lasting transformational impacts.”

Guyana proudly associates itself with the Caribbean as one of the founding members of CARICOM and since taking office, government has taken up a leadership role in CARICOM, especially regarding food security. The transformational impacts of the agreement on Guyana will also impact the rest of the Caribbean.

“Because the truth is that an investment in Guyana is an investment in the Caribbean. An investment in infrastructure that will advance the food security agenda, that will advance our capacity to produce food or an investment in energy that will enhance our capacity to produce value added agricultural produce, is an investment not only in Guyana but an investment in the Caribbean.”

The EXIM Bank is the official export credit agency of the US Government which provides financing and other instruments to promote economic development in partner countries.

The signing was the first framework agreement Guyana has concluded with EXIM Bank.

President Dr. Mohamed Irfaan Ali, following the agreement, said it was the “single most important” signing for not only Guyana but the entire Caribbean.Guyana expects oil & gas revenues of $7.5 bln in 2030,

 

Guyana’s unshakeable commitment to sustainable development

July 28, 2022

During a discussion on , ‘Strengthening the Guyana-US Relationship’ organised by the Centre for Strategic and International Studies (CSIS) Americas. President Irfaan Ali reiterated Guyana’s commitment to fighting climate change and developing sustainably. He emphasised the country’s potential in becoming a world leader in key sectors such as the environment, agriculture and technology.

“Our commitment to climate change and development, sustainable development, is unshakable.”

Over 80% of Guyana is covered by forests exceeding the size of England which currently stores over 19 gigatonnes of carbon and is attached to a value of exceeding US$500bn.

“So I present to you a country that is enormously rich in biodiversity, ecological services, environmental services.”

Climate change cannot be mitigated in a “transactional way” but through global policy formation supported by all.

“There needs to be a balanced conversation, a conversation that understands the reality of the world. Because guess what, when supply becomes low, and demand continues to increase, prices are affected and the most affected continues to be the developing world. So this conversation cannot take place without the balance.”

This balance is highlighted by Guyana as an oil-producing nation.

“And I want to present Guyana as a perfect example of a country and a policy-making environment that is seeking to achieve that balance in our development trajectory and our commitment to climate change. We are a net zero country, we have among the lowest deforestation rate in the world at 0.05%. We have a forest that goes through all the rigid global audits and we are not going to change that.”

Guyana’s development is structured in a Low Carbon Development Strategy that includes the enhancement and prosperity of livelihood, the development of the infrastructure and the human resources and the transformation of the country as an important part of the Environmental Modelling.

“As we move forward with our oil and gas sector, we are simultaneously moving forward and advancing our forests as a tool to combat climate change. And we are now moving to a Low Carbon Development Strategy 2030 that expands beyond the forests to the ocean and the blue economy.”

FOOD SECURITY AND TECHNOLOGY

Guyana has the potential to become a leader in food security and agriculture technology.

“Guyana has rich freshwater resources. We have abundant freshwater, large-scale arable lands, we are well positioned to be the food basket of CARICOM. In the early days of the development of CARICOM, Guyana was referred to as the food basket of CARICOM.”

The regional bloc, being led by Guyana, is working aggressively on a plan to reduce its food import bill by 25% by 2025.

“We have the potential to become a leader also in climate change, food security, transport and logistics.”

Guyana’s geographic position of being in South America allows economic access to Brazil and other countries on the continent. President Ali mentioned the country’s plans to revolutionise its health and education sectors and not only make them world class, but global hubs.

Guyana to join Big League

July 25, 2022, by Melisa Cavcic

Rystad Energy, an energy intelligence group, revealed that Guyana’s burgeoning offshore oil and gas industry is poised to enter the big league with revenues set to break the $1 billion mark in 2022 and see a significant annual acceleration in 2030.

This boost in revenue is powered by the Stabroek block, according to Rystad Energy’s research, which shows that the government’s revenue from domestic production is on track to surpass the $1 billion mark this year and accelerate to $7.5 billion annually in 2030. This year is set to be a turning point for the government to start capitalising on the vast reserves in the offshore field, with revenues more than doubling over 2021 levels.

 

Natural Resource Fund

July 13, 2022

Senior Finance Minister Dr Ashni Singh announced that Government has made its second draw down from the Natural Resource Fund in accordance with the Natural Resource Fund (NRF) Act 2021.

The Minister indicated that pursuant to Section 16 of the NRF Act 2021, a further US$200 million equivalent to G$41.6 billion has been transferred from the Natural Resource Fund to the Consolidated Fund to finance national development priorities. It would be recalled that in May of this year, Government made its first withdrawal of $200 million equivalent to G$41.7 billion. This brings the accumulated withdrawals to date from the NRF to US$400 million, equivalent to G$83.3 billion.This transfer was made in accordance with the strengthened legal architecture of the NRF Act 2021. The International Monetary Fund, which recently concluded the 2022 Article IV mission to Guyana in May-June of this year, commended Government on the amendments made to the NRF Act and the staff concluding statement highlighted:

“The recent amendments to the 2019 Natural Resource Fund Act set clear ceilings on withdrawals from the fund for budgetary spending and promote transparency in the management and use of oil resources. Staff praised the authorities’ thorough review of the 2019 NRF Act before making amendments, and the restraint in using any oil revenues before the passage of the amendments,’

The NRF Act 2021 came into operation on 1st January 2022, and as part of the Budget 2022 process, Parliamentary approval was granted for a total of US$607.6 million to be transferred during fiscal year 2022.

The PPP/C Government will continue to work aggressively through sound and transformative investments of oil resources from the NRF, utilising these resources in a clear and transparent manner, to the benefit of present and future generations.

World Bank

Jul 17, 2022

World Bank criticised the Guyana Government’s offshore oil production arrangement with Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—based on safety, environmental concerns and inadequate payment and has since downgraded its rating of the country’s oversight of the project.

Its report dated March 2022, documents the World Bank issuing an interim report that found the country’s rating had slipped from “Moderately Satisfactory” to “Moderately Unsatisfactory.”

While grant activities have been designed to help Guyana boost staff, experts, training and analysis at the Ministry of Natural Resources and Ministry of Finance, this came to a halt at the end of 2021. This is despite the fact that grants made to the country were expected to support work through 2024. Meanwhile, flaring pollution and other risks continue.

In 2019, the World Bank had approved a US$20M loan for Guyana to build its oversight capacity but this was never taken and, government officials state the administration is in the process of refining its priorities before approaching the International Financial Institution again on the loan.

Minister of Natural Resources Vickram Bharrat that ministry teams are “refining” and bringing the US$20M loan facility on par with government priorities for the oil sector.

He suggested that, that work should be completed soon. The line of credit sought to strengthen various aspects of the oil industry, including support for cost oil audits and other fiscal areas, environmental monitoring and skills training for locals. The delay in utilising the US$20M to build capacity and refusal of an additional US$1M grant to build the capacity of the Environmental Protection Agency, another key agency in the oversight mechanism indicate a worrying trend.

Guyana missed another opportunity to build capacity in its oil and gas industry, after the World Bank US$20M loan, which the country also failed to utilise.

One Component of the World Bank ‘Guyana Petroleum Resources Governance and Management Project’ totalling some US$5.5M, would have seen agencies such as the Guyana Geology and Mines Commission (GGMC) and the Department of Energy (DoE), among others, receiving “on-the-job training” in reservoir engineering and geology.

This would have provided the State with independent third-party technical expertise to analyse estimates of oil and gas resources, assess and conduct economic and fiscal modelling to help forecast oil and gas revenues, and support the cost audit of existing Production Sharing Agreements, among other things.

FUnds would have supported the immediate technical needs at key institutions. Guyana lacked the necessary human resources to address critical and immediate technical needs within prime institutions responsible for the sector.

One sub-component of that loan also sought to address gaps “through the direct engagement of external expertise to support the Department of Energy, Guyana Geology and Mines Commission, Ministry of Finance, the Guyana Revenue Authority, the Attorney General’s Chambers and the Petroleum Commission,” which is yet to be established.

The Bank said that given its experience in oil and gas projects, it found that capacity building is most effective when it is based on tangible on-the-job training and learning by doing approach. “Therefore, this activity will allow for the hiring of oil and gas experts as advisors to provide general technical opinions, commercial advice, policy analysis, review of key documents, and other contributions, but more importantly, to deliver on-the-job training and peer mentoring, working closely with the government staff to transfer knowledge and build long-term capacity to manage the oil and gas sector.”

The areas of focus would have included, capacity building to monitor, regulate, and review, among other things, studies on reservoir engineering and geology which would provide the government “with independent third-party technical expertise needed to analyse estimates of Guyana’s oil and gas resources. Assess and conduct economic and fiscal modelling to help forecast oil and gas revenues, support revenue administration and taxation, and evaluate options for future modifications to Guyana’s oil and gas fiscal regime and support the cost audit of existing Production Sharing Agreements.”

The legal aspect of the project would also assist government in addressing upstream legal issues associated with oversight of the oil and gas resource. At a cost of US$1 million, another aspect of the B component aims to provide the critical hands on training. It said, “To complement the injection of immediate technical capacity that will be provided through B.1…, this sub-component will provide training to strategic staff of the main governmental agencies directly involved in oil and gas.” Other aspects of the component covering the total budget are data and environmental management.

World Bank loan

Jul 07, 2022

A downgraded performance on the World Bank Guyana Petroleum Resources Governance and Management Project (GPRGMP) loan is another indicator of how financially exposed the country remains at effectively protecting and managing the oil sector.

As institutional capacity- building priorities lag oil development, the Institute for Energy Economics and Financial Analysis (IEEFA) reiterated the grim financial and environmental position Guyana further faces by not utilizing the 2019 loan.

IEEFA has argued that not only is Guyana receiving “too small a portion of the (oil) project revenue but also is at risk due to weak environmental and fiscal contract requirements.” Given the haste to proceed with drilling, the government and the oil companies left Guyana exposed to a series of risks.

One of the most important fiscal issues is determining if companies are complying with the oil contract. Careful scrutiny of paperwork submitted with each oil lift and profit statement is important to make sure Guyana is protected. However, the World Bank review makes it clear that the government of Guyana does not have the right protections in place.

Recognising also that other solicitations for services to upgrade environmental monitoring and oversight were apparently dropped, the IEEFA opined that if Guyana had awarded and implemented the contracts, “it could have avoided a recent embarrassing judicial ruling that found the government broke the law by giving ExxonMobil a 20-year permit when the law only allowed for the award of a five-year permit.”

IEEFA said that the World Bank makes grants to help countries work in good faith to provide a stable, predictable economic environment. Given Guyana’s own situation, it could learn from the experiences of other countries that work with international oil companies. “For many countries, the significant benefits from the venture turned into major scandals. Some combination of poor fiscal planning, lax environmental enforcement or undisciplined money management and spending usually spell trouble, either in the form of tragic environmental accidents or money ending up in the wrong pockets.”

IEEFA stated nonetheless that the benefits from the World Bank grant program have yet to be demonstrated. “Oil companies and their project partners often object to environmental and fiscal rules because they take time—and in the oil business, time is money.” ExxonMobil and its partners want to move quickly and with recent turns of the oil market, more volume extracted at today’s extraordinarily high prices is a strong reason to move quickly. Long term, ExxonMobil has seen revenues drop over the last decade as oil’s market position has been eroded by competition and several ExxonMobil projects in Canada, Russia in 2018 and again in 2022, and the United States have come up short. The government of Guyana is similarly in a hurry, because the demand for oil may dry up before the wells.

The World Bank’s expression of concern is nonetheless a warning that unbridled speed of oil development poses risks. IEEFA said that the companies have paid more than USD$700 million to Guyana for its share of profit oil and royalties, “yet Guyana has released no audit assuring the public that it has been paid the right amount. The public also does not know how costs have been applied to the project.” Flaring pollution and other risks continue. “When a country makes a promise to reach for higher ethical standards and then walks back on the deal, it is worth asking a few questions.”

In 2019, the last administration sought US$20M from the World Bank for the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector. Since the current administration had not requested any disbursements from the loan, the project’s overall implementation had been downgraded to ‘Moderately Unsatisfactory’, with around 24 percent of the total credit disbursed and no disbursement requests received by the Bank since October 2020. As late as December 2021, the World Bank said that government highlighted its intention to “refine the scope of the project to bring it in line with current government priorities.”

The US$20M project has four components:

• Component A – Enhancement of Legal Framework and Stakeholder Engagement: (US$3.20 M),
• Component B – Capacity Building of Key Institutions: (US $10.70 M),
• Component C – Enhancement of Fiscal Management Systems: (US$3.50 M), and
• Component – D. Project Management & Project Preparation Facilities: (Cost $2.60 M).

The Bank said it remains on standby awaiting any guidance from the Guyana government.

Guyana leads petroleum exploration

Jul 12, 2022

Rystad Energy, Norwegian independent energy research and business intelligence company that provides data, tools, analytics, and consultancy services to the l energy industry reports that South America has taken the exploration crown for discovered volumes of crude oil and the continent is set to remain a global exploration hot spot for the next two years, with Guyana taking the lead with a plethora of oil and gas resources already proven and drilling campaigns underway.

Reporting on Latin America’s Regional Insights for June 2022, Rystad documented that South America’s position is driven primarily by activity in Guyana, Brazil, Suriname, and Colombia. Increase in the offshore well count in the region is expected to be led by Guyana, followed by Brazil and Colombia, while onshore exploration, which retreated in the past two years, is on track for a comeback this year and in 2023.

Following the slump in the pandemic, which sent oil demand and prices tumbling, the region has seen a recovery in activity this year. An analysis of the period from 2017 to 2022 revealed that South America takes the top spot among all continents in terms of discovered hydrocarbons. The position is mainly attributed to Guyana which takes the top spot in the region due to the plethora of finds by American IOC ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), on the prolific Stabroek Block which spans over six million acres in the Exclusive Economic Zone (EEZ). EEPGL is the operator of the country’s richest oil block, estimated to hold nearly 11 billion barrels of equivalent of oil (beo). The block is being developed by EEPGL which holds a 45 percent stake, Hess Guyana Exploration Limited with a 30 percent share, and CNOOC Petroleum Guyana Limited the remaining 25 percent.

Close to 14.5 billion barrels of regional resources were discovered in the 2017 to 2022 period, of which Guyana accounts for 65 per cent, followed by Suriname with 15 per cent. Guyana-Suriname Basin continues to be an exploration hot spot in the region and has taken center stage since the breakthrough 2015 Liza discovery on the Stabroek Block, which de-risked the basin. Notably, since 2021, 86 per cent of all the discovered resources in the region lie in Guyana and Suriname.

In less than six months of 2022, the region discovered hydrocarbon volumes close to the total unearthed during the whole of 2021. Major discoveries in the region include the Whiptail, Cataback and Pinktail find on Stabroek, which added 1 billion barrels of reserves. Other major discoveries in the region in 2021 were Keskesi East, by Total Energies off Suriname, and the Urissane discovery by Petrobras off Brazil.

5 discoveries for 2022 in the Stabroek Block, allowed Guyana to garner another title. As Russia takes the lead for the largest discovered volumes of oil and gas resources since 2015, positioning second is Guyana, which is followed by the United States of America (USA).

Exxon is engaged in an aggressive 25-well exploration campaign that began in June of last year. That drilling campaign is expected to last until the end of 2025. This is in addition to a separate 12-well campaign that had begun in December 2020 in the Stabroek Block and ended earlier in 2021.

Outside of the prolific Stabroek Block, Exxon is engaging the Environmental Protection Agency (EPA) to commence two separate 12-well drilling campaigns in the Canje and Kaieteur oil blocks.

For the Canje Block, Exxon is hoping to commence its drilling campaign in the fourth quarter of this year and wrap up in the first quarter of 2025. The Canje Block is located offshore in deepwater of Guyana, southeast of the Kaieteur Block, and north-northeast of the Stabroek Block.

For the Kaieteur Block, this exercise, once approved, would start in 2022 or 2023 and conclude by the first quarter of 2027. The Kaieteur Block, which spans 13,500 km2, holds a gross, estimated prospective resource of over 2.1 billion barrels of crude.

Total Energies’ Block 58 across the border in Suriname, added 250 million barrels and Petrobras earlier this year drilled three wells in Brazil’s pre-salt polygon. The state-owned giant announced the presence of hydrocarbons at its Curacao well drilled on its Aram Block in the pre-salt Santos Basin and announced an oil discovery at its Alto de Cabo Frio Central Noroeste well on its Alto de Cabo Frio Central Block in the pre-salt Campos Basin. Petrobras plans to drill appraisal wells at both these finds later in the year.

 

Guyana team expounds values in USA

July 25, 2022

In the shadow of PRC sanctions, His Excellency Dr Irfaan Ali defined this week’s engagements in the US as “extraordinary” with the aim to discuss areas of mutual interest, areas of strength and to expand the bilateral relationship .

Meetings on the opening day of the visit were very fruitful and highlighted the importance of closer collaboration. At the Adrienne Arsht Latin America Center, Washington DC, where he Atlantic Council hosted a discourse on how he envisions the future of the US-Guyana relationship President Ali hailed the synergy that already exists between the nations and ways to enhance it.

“The goal of this week is to bring harmonisation between the plans and the programmes of Guyana and the aspirations of the US, both at the governmental level and the private sector. We cannot have a partnership unless the two countries have a fulsome understanding of the development priorities, the challenges and the opportunities and how those challenges can be mitigated and how those opportunities can be advanced.”

The President and his delegation, including Vice President, Honourable Dr Bharrat Jagdeo, met high-ranking US Government officials, including US Deputy Secretary of Commerce Don Graves and US Secretary of State Antony Blinken, to discuss a range of issues on the opening day of the visit. Discussions centred on various matters, including climate change, security in Guyana and the rest of the region, food security, energy security and the debt crisis. The Minister of Foreign Affairs and International Cooperation, Hon.Hugh Todd and Foreign Secretary Robert Persaud are also in Washington for high-level engagements at the invitation of the US Government.

NON-OIL ECONOMY

The President emphasised that while Guyana is an emerging hydrocarbon market, a very important part of the country’s development trajectory is to ensure that the economy will not be hydrocarbon-based. He pointed to the focus on agriculture and food security while outlining CARICOM’s target of reducing the region’s food import bill by 25% by 2025.

Guyana has all the natural assets to be a leading food producer in the region but lacks the appropriate technology and investment in infrastructure to ensure that the country’s agriculture is sustainable and resilient to climate change and the effects of climate change.

“That requires capital, and this is one example of how the revenues from oil and gas can be deployed to position Guyana, not only for the benefit of Guyana but to position Guyana to contribute significantly to the food security of the region as a whole.”

Guyana’s rich endowment of natural resources and the country’s biodiversity and environmental wealth can all drive development.

EXTENSIVE INVESTMENT PORTFOLIO

President Ali referred to several pillars of Guyana’s diversified economy beyond agriculture.

“We want to build a knowledge economy that is supported with investment in ICT, making Guyana a natural hub for ICT services. We are also building in our development incentives so that multinationals can move their regional headquarters to Guyana to support their investments, to support their position in the market, in the region, Latin America and Caribbean.”

Essential components of this development and transformation are good governance, democracy and transparency. The Government is working aggressively on ensuring that the country’s democratic credentials are embedded in the moral aspect of the development of the country.

“That is why the relationship with the US is so critical, because we share common values on democracy, on freedom.” These common values were brought to the forefront of the meeting with the US Secretary of State.

The President outlined other critical aspects of the country’s development trajectory, including the benefits of its massive housing programme, expansion of the tourism sector, the national energy master plan and plans for Guyana’s infrastructure transformation.

GUYANA/US RELATIONS

The Head of State reiterated that the United States is a “valued partner” and that the two countries share a “special relationship” and common views on critical issues.

“The US has always been very supportive of the growth and development of our country, and more recently, the US has been very instrumental and supportive in ensuring that democracy prevailed in our country, and that came about because of the fundamental value system of the US. The way the United States values democracy and the political party I come from, we share those values.”

He addressed the relationship between the private sectors of both countries, their contribution to Guyana’s development through the involvement in various spheres including oil and gas and the expansion of this cooperation to allow the US private sector to “play a greater role to go after great opportunities”.

“What we’re seeking to do is to expand that participation in all the other sectors, the emerging areas, ensuring that the US is at the table on climate change, on us finding the balance in terms of energy security, working together in dealing with transnational crime. We have had an aggressive increase in our collaboration and partnership in dealing with security issues.”

The Guyana/US relationship is about two countries working together, trusting each other, supporting each other and sharing a relationship built on stability, values and principles, human rights, democracy and freedom. These shared values will redound to the benefit of the private sector of both countries and ultimately, the people of both the United States and Guyana will benefit from “this sustainable, long-lasting value-based relationship that we’re advancing”.

Guyana oil and gas will fuel broad development

July 25, 2022

President Dr. Mohamed Irfaan Ali, said the essential resource of oil and gas is an important part of the country’s development trajectory but while Guyana is rapidly evolving as an energy market, the economy will not depend solely on the treasured natural resource for countrywide development. Hydrocarbosn will bring essential revenues into the country which must be used to expand the economy, increasing competitiveness and opening up new opportunities.

In a live broadcast hosted by the Atlantic Council at Adrienne Arsht Latin America Center, in Washington DC, President Ali emphasised that the funds will be used to unlock the potential of several areas which existed for a long time but were stagnant due to lack of resources.

“Guyana has all the natural assets to be a leading food producer in the region. But food production today must be backed by appropriate technology and investment in infrastructure that will ensure the agriculture is sustainable and resilient to climate change and the effects of climate change,” he noted, while stating that such an achievement requires capital.

“…and this is one example of how the revenues from oil and gas can be deployed to position Guyana, not only for the benefit of Guyana, but the position Guyana to contribute significantly to the food security of the region as a whole,” he added.

The prosperity of Guyana must also bring wealth and success to the region. Guyana’s biodiversity and environmental wealth is well documented. The standing value of the forests is over US $500 billion. The forest stores 19.5 gigatons of carbon and has the potential of earning in excess of US $100 million in carbon credit annually. To back the forest, there are opportunities that reside in other natural resources including bauxite, gold, and diamond. Guyana is rich in minerals and those areas can be supported to become competitive with the necessary investments.

“…whether is the roadways, the opening up of these areas, in a way that is sustainable. Investing in the right technology so that we can maximise output whilst protecting the environment.”

The government investment portfolio goes beyond oil and gas, agriculture, and human transformation. The administration wants to build a knowledge economy supported with Information and Communications Technology (ICT) to make Guyana a natural hub for ICT services., building in development incentives so that multinationals can move their regional headquarters to Guyana.

“As we move forward as a country, important to the development and transformation that will take place is governance, democracy, transparency, and we are working aggressively on ensuring that all democratic credentials are embedded in the moral aspect of the development of our country.”

Food

Food production plays a critical part in the development trajectory. The development mix which includes infrastructure, and economic transformation among other things, require the human resource transformation.

“That’s is why we are investing in health and education and we are using the best who are good at this. Whether is the overhaul of the management system for our healthcare, ensuring that we have an education system that does not just deliver academic education, but one that positions our education output into areas that the future economy would require, whether it’s robotics, software engineering, software development, coding, these are all areas in which we want our human resource potential to be positioned to take advantage of.”

 

 

 

SBM Offshore secures US$1.75B loan for fourth FPSO

Jul 22, 2022

Dutch manufacturer, SBM Offshore announced that it has completed the project financing of the ONE GUYANA floating, production, storage and offloading (FPSO) vessel—Guyana’s fourth and largest oil ship—for a total of US$1.75 billion.

ONE GUYANA hull sails from PRC to Singapore

Project financing was secured by a consortium of 15 international banks. The company expects to draw the loan in full, phased over the construction period of the FPSO. The financing will become non-recourse once the FPSO is completed and the pre-completion guarantee has been released. Non-recourse financing, is a type of commercial loan requiring only repayment based upon proceeds generated from the project.

FPSO ONE GUYANA builds on the experience to date of FPSOs built for the country by SBM. These include Liza Destiny, Liza Unity and Prosperity. The design is based on SBM Offshore’s industry leading Fast4Ward® programme that incorporates the company’s new build, multi-purpose hull combined with several standardised topsides modules.

The FPSO will be designed to produce approximately 250,000 barrels of oil per day, will have associated gas treatment capacity of 450 million cubic feet per day and water injection capacity of 300,000 barrels per day.

Spread moored in water depth of about 1,800 metres, the FPSO will be able to store around two million barrels of crude oil. The project is part of the Yellowtail development which is the fourth projectt within the Stabroek block. Yellowtail is expected to cost US$10B, will include six drill centres and up to 26 production and 25 injection wells.

In the Stabroek Block, Esso Exploration and Production Guyana Limited, an affiliate of Exxon Mobil Corporation, is the operator and holds a 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds a 25 percent interest.

The partners have discovered over 11 billion oil-equivalent barrels. The company anticipates up to 10 projects on the Stabroek Block to develop this resource.

 

CGX to transfer majority interest in Corentyne block to partner

Jul 23, 2022

On approval of the Toronto Stock Exchange and the Guyana Government, CGX Energy Inc. will officially transfer majority interest in the Corentyne Block to its joint venture partner, Frontera Energy Corporation, via an amended agreement.

As part of the new deal, CGX will transfer 29.73% of its participating interest in the Corentyne block to Frontera in exchange for Frontera funding the joint venture’s costs associated with the Wei-1 exploration well for up to US$130 million and up to an additional US$29 million of certain Kawa-1 exploration well, Wei-1 pre-drill, and other costs.

CGX shall assign an additional 4.94% of its participating interest in the Corentyne block to Frontera as consideration for the repayment of the outstanding principal amounts under two loans. They are the previously announced US$19 million convertible loan to CGX dated May 28, 2021, as amended and the previously announced US$35 million convertible loan to CGX dated March 10, 2022, as amended, and a cash payment of US$3.8 million.

As a result of this new agreement, CGX will have a 32.00% participating interest and Frontera will have a 68.00% participating interest in the Corentyne block.

CGX is in the process of obtaining a formal valuation for the Corentyne block in connection with the Agreement, in accordance with the Toronto Stock Exchange Venture Exchange requirements.

Following the announcement of the transfer of interest, Professor Suresh Narine, Executive Co-Chairman of CGX said his company is pleased to complete this farm-in agreement with Frontera, which enables CGX to strengthen its balance sheet and secure funding for the Wei-1 exploration well.

“Our continued partnership with Frontera reflects the significant value we have created on the Corentyne license and the opportunity set that is now before us following the discovery of hydrocarbons at the Kawa-1 exploration well. We are focused now on the transformational potential of the Corentyne block ahead of spudding the Wei-1 exploration well in October 2022, pending rig release from the current operator.”

Dr Orlando Cabrales, Chief Executive Officer of Frontera was keen to note that his company is excited to complete this agreement with CGX.

“Building on the Joint Venture’s recent light oil and condensate discovery at the Kawa-1 exploration well, the Agreement supports CGX’s capital needs for the Wei-1 exploration well and provides Frontera with an increased participating interest in the Corentyne block which is truly one of the most exciting exploration areas in the world.”

CGX said final preparations are underway in advance of spudding the joint venture’s second exploration well, called Wei-1, in October 2022, subject to rig release from a third-party operator. It said the necessary long lead materials have been secured and are being mobilized.

As of July 15, 2022, 95% of key drilling staff that executed the Kawa-1 exploration well remains contracted for the Wei-1 exploration well. An independent operations readiness review has been completed with no significant obstacles to spud.

Wei-1 exploration well will be located approximately 14 kilometres northwest of the Kawa-1 exploration well in the Corentyne block. The Wei-1 exploration well will be drilled in water depth of approximately 1,912 feet (583 metres) to an anticipated total depth of 20,500 feet (6,248 metres) and will target Campanian and Santonian stacked channels in a western channel complex in the northern section of the Corentyne block.

CGX Resources Inc., operator of the Corentyne Block, has again contracted the Maersk Discoverer to drill the Wei-1 exploration well, maintaining continuity in the exploration programme during a period of high demand in the region and consistency in working with a team familiar with the rig, which is important from a health and safety, efficiency and operational perspective.

In conjunction with the drilling contract between CGX Resources and Maersk, Frontera anticipates entering into a parent company guarantee with Maersk for certain obligations in connection with the day rates under the drilling contract on behalf of CGX Resources, up to a maximum of US$30 million subject to a sliding scale mechanism in connection with payments.

 

 

Low Carbon Development Strategy

2030 July 21, 2022

Senior Minister with responsibility for Finance, Dr. Ashni Singh presented Guyana’s Low Carbon Development Strategy (LCDS) 2030 to the National Assembly which will debate the motion on the LCDS 2030 at its next sitting.

The presentation of the LCDS 2030, follows a more than seven-month national consultation, based on a draft strategy launched by His Excellency President Irfaan Ali in an Address to the Nation on October 28, 2021. This revised version of the LCDS 2030, incorporates feedback and comments received during the national consultation process.

Thousands of citizens across Guyana participated in information sharing and consultation. In his foreword President Ali thanked participants for ideas and opinions.

“The strategy that has resulted is not a static document – but rather a vision that will live for years to come. It sets a direction of travel that I believe will catalyse innovation and new ideas as its various elements move to implementation. I hope that as this implementation pathway evolves, our national conversation and consultation about its important measures will continue. I want everyone in the country to have the chance to forge opinions about sustainable development.”

LCDS 2030 builds from an original vision in 2009, when then-President, Dr Bharrat Jagdeo, sought new global models for low-deforestation development pathways – stating:

“Tropical Forest countries have long called for the ecosystem services provided by the world’s standing forests to be properly valued, through both public and private finance. This will enable people who live in forests and forest countries to create jobs and economic opportunity from an economy that works with nature, instead of today’s reality where forests are worth more dead than alive.”

This vision was given life through the LCDS 2009, which underwent one of the biggest national consultations in Guyana’s history at that time – and outlined a three-phase process whereby Guyana could earn money from forest climate services and invest these in LCDS priorities.

For Phase I, Guyana sought a bilateral partner who shared the country’s vision and who was willing to partner to create a model for the world. This culminated in the 2009 Guyana-Norway Agreement which, at the time, was the second largest forest agreement of its kind in the world. Norway paid Guyana over US$220 million for forest climate services for the period 2009 to 2015.

These revenues were, and are still being invested in clean energy, low carbon jobs, Amerindian land titling, the Amerindian Development Fund project, rehabilitation of the Cunha Canal and other climate resilience work, support for small and medium enterprise development in collaboration with the local banking sector and many other investments which were set out in the LCDS 2009 and a 2013 update. Crucially, through this period, the Guyana Forestry Commission (GFC) invested heavily in building one of the worlds’ most advanced forest carbon Monitoring, Reporting and Verification Systems (MRVS). No payments were received for performance after 2015. However, on resuming office, the PPP/C Government re-establised and expanded the means to implement the vision of the original LCDS.

Guyana is now able to advance and to move to Phase II of the plan that was set out in 2009. In Phase II, Guyana can start to replace or augment payments from Norway and instead receive revenues for forest climate services from global voluntary carbon markets. At the same time, the LCDS 2030 sets out how the country can prepare for potential revenue streams from other ecosystem services, including those based on world-class biodiversity and water resources.

The LCDS 2030 will be funded from more than just the new revenues from forest carbon markets – regular national finances will also be deployed. However, there are particular new opportunities to use the new revenue streams from carbon markets to the benefit of those who live in, and depend on, the forest – as well as other local communities. The national consultation on the LCDS 2030 sought ideas on how new revenues could be invested. The strategy sets out two pathways:

National programmes as outlined in the draft LCDS 2030, including investments in renewable energy, land titling, protection against climate change, and other areas;

1. Community/Village-led programmes for indigenous peoples and local communities (IPLCs) as set out in Village Sustainability Plans (VSPs) or equivalent, put together by communities themselves in accordance with the principles of Free, Prior and Informed Consent (FPIC) as set out in the LCDS 2030 Chapter Two.
2. A dedicated 15% of all revenues from forest carbon markets will be available to Amerindian communities who choose to opt in and produce their own Village Sustainability Plans.

This proposal was welcomed by the National Toshaos Council in a resolution on July 15, 2022 with the NTC resolution recognizing “the extensive national-scale and community-based consultations, conducted over the past seven months, [which] have informed the main aspects of LCDS 2030” while welcoming “the commitment expressed in the LCDS 2030 to continued consultation and engagement with Indigenous Communities and Villages as the LCDS moves to implementation.”

On July 18, 2022 the Multi-Stakeholder Steering Committee of the LCDS approved the finalisation of the Strategy based on the wide-ranging stakeholder feedback since October 2021. The MSSC oversees the consultative process and implementation of the LCDS 2030. It comprises representatives of Ministries and agencies, non-governmental organizations, the private sector, youth, mining. forestry producers, the National Toshaos Council, indigenous communities and civil society. The MSSC will continue to meet regularly after the LCDS has been tabled in the National Assembly to take forward elements of the LCDS, which will require further consultation and idea generation.

With the approval of the MSSC, the LCDS 2030 was tabled in the National Assembly. In the foreword, President Ali said:

“I hope that individuals, businesses, and organisations – in Guyana and across the world – will stay engaged. I also hope that all politicians in the National Assembly will recognise that the long-term ambitions contained in this LCDS 2030 are ambitions for Guyana, so deserve support and continued engagement. Because if we work together, we can advance development for all our people. We can also demonstrate to the world – but perhaps more importantly to ourselves – that our “one Guyana” is more than up to the task of achieving big things and creating a better future for all.”

 

Second notification to Parliament of NRF revenues

July 21, 2022

Senior Finance Minister Dr. Ashni Singh presented Notification Receipts to the National Assembly of all petroleum revenues paid into the Natural Resource Fund (NRF) during the period 1st April 2022 to 30th June 2022, pursuant to Section 33 (2) of the NRF Act 2021. This notification was published in the Official Gazette on 18th July 2022 and reaffirms the Government’s commitment to greater accountability and transparency in the management of Guyana’s oil resources.

The Natural Resource Fund (NRF) Act 2021, came into operation on January 1, 2022, replacing the illegitimate APNU/AFC NRF Act 2019. One of the key amendments to the legislation is that the Minister could face up to ten years imprisonment if he fails to disclose the receipt of any petroleum revenue received by Government in the Official Gazette within three months of receipt of such monies.

Under the APNU/AFC regime US$18 million signature bonus collected by Government from ExxonMobil was not disclosed to the citizens. Former Minister Jordan even denied receiving this sum until information came to light, confirming that the Ministry of Finance asked the Bank of Guyana to set up a special account in which the amount was to be placed. With the provisions in the new Act, a situation like this could never repeat itself.

The International Monetary Fund (IMF), which recently concluded the 2022 Article IV mission to Guyana in May-June of this year, commended the PPP/C Government on the amendments made to the NRF Act and the staff concluding statement highlighted:

“The recent amendments to the 2019 Natural Resource Fund Act set clear ceilings on withdrawals from the fund for budgetary spending and promote transparency in the management and use of oil resources. Staff praised the authorities’ thorough review of the 2019 NRF Act before making amendments, and the restraint in using any oil revenues before the passage of the amendments,’

The Government will continue to manage Guyana’s oil resources in a clear and transparent manner, to the benefit of present and future generations.

 

Guyana Shore Base Inc signs 11-year contract extension with EEPGL

July 19, 2022

Guyana Shore Base Inc (GYSBI) clinched an 11-year extension contract with ExxonMobil affiliate Esso Exploration and Production Guyana Limited (EEPGL), for the provision of shore base management and operations services.

• GYSBI invested over US$300M towards port infrastructure, real estate development, warehousing and support services;
• recruited, trained and certified more than 1000 Guyanese for key operational positions within the industry and beyond through its affiliates;
• catalysed over USD$500M in investment in the Houston/McDoom, East Bank Demerara corridor by providing the enabling infrastructure and creating the first oil and gas activity hub in Guyana that also generated direct and indirect employment for over 2000 persons.

In 2017 the company signed a contract for eight acres, two berths and one warehouse. Today, it stands at 170 acres, 8 warehouses and four berths, with further expansions planned. Started with five employees, GYSBI today has a workforce of 616 persons, 95 percent of whom are Guyanese.

At an event to commemorate the achievement, Minister of Natural Resources, Vickram Bharrat, hailed the new contract and noted that GYSBI is a prime example of what is possible for Guyanese businesses in the relatively new oil and gas sector.

“Let me congratulate and commend GYSBI and ExxonMobil Guyana…We are happy to be here to see this signing… and seeing another Guyanese company taking a big stride in the oil and gas sector and putting Guyana on the map. With a projection of 11 billion barrels of recoverable resources and further drilling activities taking place, the government is optimistic that more discoveries would be recorded and therefore, more Guyanese companies would be called upon to meet the myriad services that will be required.

“As a government, we are not afraid to take bold steps. Some people may say that we are moving too fast and indeed we are moving fast. I don’t think we have seen this pace of developing an oil and gas sector in any country, especially a third world country like Guyana.

“The Local Content Act was enacted to ensure that Guyanese benefit from the oil and gas sector, which they truly deserve. Guyanese must benefit and as a government we are entrusted to do it, in partnership with our foreign partners. We see you as valuable partners and we are committed to working with you to ensure we develop these resources in a way that benefits both the people of Guyana and the company.”

Robin Muneshwer, Executive Director of GYSBI, said that the contract extension builds on five years of continuous investment, hard work, training and development of local capacity to create a world-class facility that meets the specialised needs of the oil and gas industry.

“The first five years… were quite challenging but ExxonMobil was a true partner in all of this. They worked with us as we developed because we were starting from scratch in a country that had no oil and gas experience or infrastructure. As we developed, ExxonMobil raised the bar, and this is where we are at right now.

“What we have developed at GYSBI is something we are extremely proud of. Our safety record is unparalleled, we have just celebrated two years LTI (Lost Time Injury) free. Our operational record is excellent… ExxonMobil has shown a lot of trust and faith in us and worked with us.”

Hayley Gilbert, ExxonMobil Guyana’s Logistics Manager said that GYSBI services are crucial to the company’s day-to-day operations.

“I have personally seen the transformation across GYBSI and I can only imagine what we can accomplish together over the next eleven years. When you are part of such a significant development on the onset, as GYSBI has been with ExxonMobil in Guyana, having continuity and sustainable business has been critical to be able to deliver the achievements that we have seen. ExxonMobil Guyana is proud to be associated with a company that continues to maintain a high standard of health, safety and operational efficiency.”

Gilbert declared that GYSBI remains critical as ExxonMobil Guyana advances its plans to responsibly develop Guyana’s oil and gas resources.

“The signing of a decade plus agreement shows the long-term commitment between two business partners. Our relationship has grown over the years as GYSBI has been our conduit from the onshore to the offshore operations, a logistics hub, providing us with world class services including drilling and production operations support, waste management and storage. As the demand for support services grew, it was clear that the expansion was necessary and GYSBI has responded to grow the multi- user facility that we see today, supporting the specialised needs of the oil and gas sector here in Guyana.”

The new contract will expire in 2033. The new contract also builds on the previous one, which was awarded to the company in 2017 and expires in August 2022. ExxonMobil currently has two oil-producing platforms in the Atlantic and two more are under construction. GYSBI was formed in 2017 by Muneshwer’s Limited, TOTALTEC Oilfield Services, Pacific Rim Constructors and LED Offshore Limited.

 

ExxonMobil plans aggressive 35-well campaign offshore Guyana

US supermajor seeks licence to advance drilling in the prolific Stabroek block

21 July 2022
By Fabio Palmigiani in Rio de Janeiro

US supermajor ExxonMobil has submitted environmental plans calling for the drilling of up to 35 new wells in the prolific Stabroek block offshore Guyana.

The proposed campaign is expected to begin in the third quarter of 2023 and be completed in late 2028, as the company plans to search for additional hydrocarbons on top of the 11 billion barrels of oil equivalent in recoverable resources discovered so far in Stabroek.

“While some of the 35 wells will be drilled for exploration purposes, it is also possible that some of the wells may be drilled as appraisal wells within the proximity of previously drilled exploration areas,” ExxonMobil said in the 41-page plan.

 

Guyana banks US$232M from petroleum in April–June

Jul 19, 2022

Guyana credited US$232,164,587 in petroleum revenues to the Natural Resource Fund (NRF) from April 1, 2022 to June 30, 2022. This is equivalent to GY$48,406,316,589, according to a notice in the Official Gazette dated July 18, 2022, published pursuant to Section 33(2) of the Natural Resource Fund Act 2021 which mandates that the Minister or any person directed by the Minister shall cause to be published in the Gazette notification of the receipts of all petroleum revenues that are paid into the Fund within three months of such receipts.

The numbers show that Guyana received a royalty payment related to first quarter production on April 28, 2022 amounting to US$21,059,488.63. Further, payment for a lift of profit oil executed on April 25, 2022 from the Liza Unity Floating Production Storage and Offloading (FPSO) was received on May 25, 2022 amounting to US$102,548,225.10. Payment for a lift of profit oil executed on May 3, 2022 from the Liza Destiny FPSO was received on June 2, 2022 amounting to US$108,556,874.23.

 

VP Jagdeo accelerates exploration

Jul 19, 2022

In a Reuters article titled, “Guyana races against the clock to bank its oil bonanza”, Vice President Bharat Jagdeo, is quoted as saying that the Government of Guyana wants to accelerate oil exploration to develop the economy speedily – even if it means Guyana gains less.

At the Guyana Manufacturing and Services Association (GMSA) mid-year dinner, Jagdeo stated that Guyana needs to develop its oil and gas resources as quickly as possible before the world decarbonizes. Notwithstanding calls to not licence any new projects for development just yet, the Vice President is reported in the media on different occasions, pushing the oil companies to go faster. According to Reuters, Guyana is putting its foot on the gas to exploit its vast oil reserves, even if that means sacrificing some longer-term gains.

“We want to accelerate exploration so we can develop the economy as fast as possible. We will probably get less, but we might be able to get faster development.”

Calls to halt developments for the country to realise a larger share of oil revenues sooner, would not benefit the country, as it could add inflationary pressures to the domestic economy.

“if we don’t keep a steady stream of investments in the oil and gas sector to open up the reserves to prove it and to take it out as quickly as possible before net zero kicks in, and the demand goes down then we’ll run out of momentum.”

Earlier, at the International Energy Conference, Jagdeo noted that despite shortcomings in Guyana’s regime with regard its structures, frameworks and regulations in place for the industry, developments in the industry must continue in an accelerated manner.

“..we have been trying to evolve the regime; because the pace of development has been rapid.” The Vice President was adamant, “…we have to, at the level of the government, try to keep the regime evolving at a pace where we don’t become a humbug on the development of the industry and slow down the pace.”

Guyana has signed a Production Sharing Agreement (PSA) with American IEC, ExxonMobil, subsidiary Esso Exploration and Production Guyana Limited (EEPGL), along with partners Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited. Under the PSA, theconsortium can recover up to 75 percent of the gross monthly income ,to pay overhead expenses including the payments for the developments.

Several analysts argued that the 75 percent arrangement is lopsided. Coupled with the fact, the oil companies have already discovered in excess of 11 billion barrels of recoverable crude oil, there are now plans to have at least 10 FPSOs in place—one every year after 2027. The argument is that with all development costs paid off, it would mean less expense for the oil operations and more profit to be split theoretically increasing Guyana’s share.

Since Liza discovery in 2015 on the petroliferous Stabroek Block, which spans over six million acres in the Exclusive Economic Zone (EEZ) the consortium led by EEPGL, made 33 discoveries. EEPGL is the operator of the country’s richest oil block. The consortium made 7 discoveries for 2022 in the Stabroek Block. The partners currently operate two producing fields, Liza I and II locations being produced by the Liza Destiny and Unity Floating Production Storage and Offloading Vessels. The Stabroek Block partners pumped 120,000 barrels of oil per day (bpd) at the start of 2022 and plans to pump 360,000 by the end of the year.

EEPGL secured the relevant permissions to develop two more projects, the Payara and Yellowtail fields, to be produced using the Prosperity and One Guyana FPSOs. Exxon is presently engaged in an aggressive 25-well exploration campaign that began in June of last year. That drilling campaign is expected to last until the end of 2025. This is in addition to a separate 12-well campaign that had begun in December 2020 in the Stabroek Block and ended earlier in 2021.

Outside of the loaded Stabroek Block, Exxon is also engaging the Environmental Protection Agency (EPA) to commence two separate 12-well drilling campaigns in the Canje and Kaieteur oil blocks. For the Canje Block, Exxon is hoping to commence its drilling campaign in the fourth quarter of this year and wrap up in the first quarter of 2025. The Canje Block is located in deepwater, southeast of the Kaieteur Block, and north-northeast of the Stabroek Block.For the Kaieteur Block, this exercise, once approved, would start in 2022 or 2023 and conclude by the first quarter of 2027. The Kaieteur Block, which spans 13,500 km2, holds a gross, estimated prospective resource of over 2.1 billion barrels of crude