Launch of offshore bid round

December 9, 2022

His Excellency Dr Irfaan Ali announced the launch of a competitive bidding process for 14 offshore oil blocks.

“As you’re aware, we have committed that the new blocks will be publicly auctioned. Today, 14 such blocks will be placed on auction. We are hoping that the close of the submission of the bids will be on the 14th of April, 2023.”

The expectation is contracts to be awarded by the end of May next year, which will follow negotiations and the evaluation of the bids received during the bidding round. On the important features of the bidding round, he emphasised that in keeping with the Government’s position during the election campaign and since returning to office, the objective is to get the best deals for the country.

“What we’re seeking to do is to have the best possible outcome for Guyana, given the lessons, we have learnt. We’ve also stated that we respect the contract on the Stabroek Block, but that every [and] any new block will be subject to new terms and conditions.”

Given the timeframe for oil and gas development, it is essential to have serious and capable developers. Strong contractual commitments and relinquishment obligations are in place in this bidding round.

“This is, once the bidder does not fulfil their obligations, the process of relinquishment (that is where you have to hand back the block to the Government) is made stronger and more expeditious.”

STRIKING A DELICATE BALANCE

Another key feature is the improvement of fiscal terms that provide a greater balance of the share of revenue between the Government and contractor while maintaining Guyana’s competitive edge in the region and at the global level.

“This is another key feature because we understand that the cost of capital for oil and gas exploration and development is going up. We also understand that access to capital has become more cumbersome. So we have to ensure that there is a balance in what we do; that is, the Government gets the best possible deal in terms of revenue, but at the same time…that Guyana’s competitive edge is not reduced.”

ENSURING TRANSPARENCY

The transparent process imposes minimum qualifications criteria that reflects international best practices and expertise as well as capital requirements necessary to conduct exploration and production activities in shallow and deep water areas, respectively. He outlined different types of expertise and capabilities required for shallow-water and deep-water operations.

“Importantly, we have separate requirements for qualifications to participate in the deeper versus shallow water blocks… deeper areas are more complex. The deeper areas require stronger capabilities. As a result of that, there are strong qualification requirements, so the bar is set higher in relation to deep-water exploration.”

Of the 14 blocks with acreages ranging from 1,000 square kilometres to 3,000 square kilometres , 11 are located in shallow water, while three lie in ultra-deepwater.

In keeping with a transparent process, oil companies participating in the auction will be required to pay a minimum signing bonus of $10m for shallow blocks, while deep-water blocks carry a signing bonus of $20m. The bidders will have to pay a US$20,000 participation fee allowing access to a virtual data room.

Specific requirements that must be met in a phased manner, with time-bound deliverables will prevent blocks from being “held up for a very long time with minimum investment. .. these new features are in keeping with our commitment during the campaign; in keeping with our commitment to enhance transparency, openness and to get the best deal for Guyana.”

The President urged stakeholders who can attract investors to participate in this process.

“We are hoping that there will be maximum participation and that Guyana would be part of a partnership that brings greater benefit, create greater wins for our country and our people.”

First Licensing Round for Offshore Petroleum

December 9, 2022

Highlights

▪ 14 blocks for tender for shallow water and deepwater areas combined
▪ Contractual commitments and relinquishment obligations to ensure expeditious development of oil and gas resources
▪ Improved fiscal terms provide a greater balance of the share of revenue between the government and contractor while maintaining Guyana’s competitive edge in the region and globally
▪ Transparent process that imposes minimum qualification criteria that reflect the international best practices and the expertise and capital requirements necessary to conduct exploration and production activities in shallow and deepwater areas respectively
▪ Separate requirements for qualification to participate in deepwater versus shallow water blocks for tender with a higher bar set for deepwater areas, which reflects the capital-intensive nature of deepwater exploration and production (E&P), and the highly specialised technical competence required for deepwater E&P activities
▪ Minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks for tender
▪ Minimum work commitments specified for the initial and renewal periods of the prospecting licence consist of a combination of seismic and drilling of exploration wells with fulfilment of prior commitment as precondition to enter into the subsequent renewal periods
▪ Participation fee of US$20,000 is payable in respect of a block for tender in order to gain access to the virtual data room and participate in the competitive bidding process.

The Government of Guyana, today, for the first time, is announcing the launch of a Licensing Round. The round offers 14 blocks for tender in the shallow and deepwater area.

This launch of the Guyana 2022 licensing round marks a new era of Oil and Gas development by the government, characterised by a competitive and favourable investment mechanism and improved socioeconomic benefits for our nation. The Government remains committed to a balanced approach of fast-tracking hydrocarbon developments while advancing environmental protection, and ensuring that Guyanese derive the maximum economic benefits of our petroleum potential.

The competitive bidding round process, officially launched with the publication of the Notice given under the Petroleum (Exploration And Production) Act, in the Official Gazette by the Minister of Natural Resources on December 9, 2022 is expected to close with the submission of bids on 14th April 2023, and contract awards expected by 31st May 2023 following evaluation of bids and negotiation process as indicated in the Ministry’s indicative terms and guidelines for the bidding round.

The Guyana offshore basin has captivated the attention of the global oil market participants. Now labelled as the gateway to the world’s fastest-growing super basin over the last four years, Guyana’s offshore is estimated to have potential resources in excess of 25 billion barrels of oil equivalent (boe) and an estimated reserve in excess of 11 billion boe. The licensing round represents an opportunity for international and local companies to access Guyana’s offshore acreages for future development in this emerging energy market. The licensing round importantly allows the Government to create and administer an improved fiscal and regulatory framework that is driven on good international oil field practices and standards.

In preparation for the launch of the round, the Government consulted international best practices and is offering a transparent and competitive process that takes into account the advances in the oil and gas sector, the current investment conditions regionally and globally, as well as in the welfare of the nation.

The indicative terms and guidelines for this competitive licensing round ensures that the qualification criteria for the shallow water and deepwater blocks for tender reflect the minimum financial capacity, technical competence as well as of health, safety, and environmental record necessary to engage in highly specialized and capital-intensive activity such as exploration for oil and gas offshore.

The Government is developing a new model production sharing agreement that will reflect the indicative terms and guidelines for the licensing round as well as introduce comprehensive provisions reflective of the developments in the oil and gas industry and international best practices observed in other jurisdictions. The indicative terms and guidelines, and the new model contract will be opened for consultation and are expected to be finalized and published on 8th March 2023 through a Notice in the Official Gazette by the Minister of Natural Resources.

Prospective Participants of the Guyana 2022 Licensing Round should visit www.petroleum.gov.gy [https://petroleum.gov.gy/guyana-offshore-licensing-round-202223] and contact the Ministry of Natural Resources at https://petroleum.gov.gy/guyana-offshore-licensing-round-2022

Launch of First offshore Licensing Round

12 Dec 2022

14 blocks for tender for shallow water and deepwater areas combined
Contractual commitments and relinquishment obligations to ensure expeditious development of oil and gas resources
Improved fiscal terms that provide a greater balance of the share of revenue between the government and contractor while maintaining Guyana’s competitive edge in the region and globally
Transparent process that imposes minimum qualification criteria that reflect the international best practices and the expertise and capital requirements necessary to conduct exploration and production activities in shallow and deepwater areas respectively
Separate requirements for qualification to participate in deepwater versus shallow water blocks for tender with a higher bar set for deepwater areas, which reflects the capital-intensive nature of deepwater exploration and production (E&P), and the highly specialised technical competence required for deepwater E&P activities
Minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks for tender
Minimum work commitments specified for the initial and renewal periods of the prospecting licence consist of a combination of seismic and drilling of exploration wells with fulfilment of prior commitment as precondition to enter into the subsequent renewal periods
Participation fee of US$20,000 is payable in respect of a block for tender in order to gain access to the virtual data room and participate in the competitive bidding process.

The Government of Guyana announced the launch of a Licensing Round offering 14 offshore blocks for tender in the shallow and deepwater areas

This launch of the Guyana 2022 licensing round marks a new era of Oil and Gas development by the government, which is characterised by a competitive and favourable investment mechanism and improved socioeconomic benefits for our nation. The Government remains committed to a balanced approach of fast-tracking hydrocarbon developments while advancing environmental protection, and ensuring that Guyanese derive the maximum economic benefits of our petroleum potential.

The Guyana offshore basin captivated the attention of the global oil market participants. Now labelled as the gateway to the world’s fastest-growing super basin over the last four years, Guyana’s offshore is estimated to have potential resources in excess of 25 billion barrels of oil equivalent (boe) and an estimated reserve in excess of 11 billion boe. The licensing round represents an opportunity for international and local companies to access Guyana’s offshore acreages for future development in this emerging energy market. The licensing round importantly allows the Government of Guyana to create and administer an improved fiscal and regulatory framework that is driven on good international oil field practices and standards.

In preparation for the launch of the round, the Government of Guyana consulted international best practices and is offering a transparent and competitive process that takes into account the advances in the oil and gas sector, the current investment conditions regionally and globally, as well as in the welfare of the nation.

The Government is developing a new model production sharing agreement that will reflect the indicative terms and guidelines for the licensing round as well as introduce comprehensive provisions reflective of the developments in the oil and gas industry and international best practices observed in other jurisdictions. The indicative terms and guidelines, and the new model contract will be opened for consultation and are expected to be finalized and published on 8th March 2022 (?) through a Notice in the Official Gazette by the Minister of Natural Resources.

#Source: Government of Guyana Ministry of Natural Resources

NRF holds over US$1.3 Billion

December 7, 2022

At the end of November, the balance in Guyana’s Natural Resource Fund exceeded US$1.3 Billion, which is over G$290 billion, according to the monthly statement issued by the Bank of Guyana.

The credits were published by the Central Bank in keeping with Section 33(2) of the Natural Resource Fund Act, which provides for the publication of all petroleum revenues paid into the fund.

According to the statement issued by the Central Bank, Guyana received G$36.9 billion (US$177.14 million) in profit oil for November. No royalties were paid for the month and there was no spending from the fund last month.

Earlier this year, Finance Minister, Dr. Ashni Singh disclosed that with the increase in the price of crude oil, revenues paid to the Natural Resource Fund are projected to be 32.5% higher than the US$957.6 million projected at the time of preparing Budget 2022.

Government is now projected to earn US$1.1 billion in revenue from the sale of its share of profit oil, and US$147.7 million in royalties in 2022, depending on oil prices, the Minister had earlier stated.

The Government late last year passed the Natural Resource Fund Act, which provides for the management and oversight of the country’s oil revenue. The NRF law has since been challenged by the Parliamentary Opposition.

A total of US$607 million is to be withdrawn this year from the fund.

Amarinth wins order for SBM FPSO

NOVEMBER 30, 2022, BY MELISA CAVCIC

UK-based manufacturer of centrifugal pumps and associated equipment, Amarinth, won an order from VWS Westgarth for two titanium pumps, for use aboard SBM Offshore FPSO One Guyana, destined for ExxonMobil offshore .

Amarinth disclosed that it was tasked by VWS Westgarth to provide the two titanium API 610 OH2 chemically enhanced backwash pumps, following the successful delivery of similar pumps for two FPSO vessels operating off Brazil.

Oliver Brigginshaw, Managing Director of Amarinth, commented: “We are delighted that VWS Westgarth has placed a further order with Amarinth for these titanium API 610 OH2 pumps. This builds on our successful delivery of a previous order to VWS Westgarth and further underlines our capabilities in supplying API 610 pumps, manufactured in exotic alloys, which will operate reliably in the extremely arduous conditions experienced on FPSO vessels.”

Amarinth API 610 titanium pumps on bespoke baseplates ready for shipment to VWS Westgarth API 610 pumps on bespoke baseplates

Close-up of titanium casing on Amarinth API 610 pump manufactured for VWS Westgarth titanium casing

API 610 pumps on bespoke baseplates titanium casing

All wetted parts of the pumps would be manufactured in titanium – including the casings, impellers and shafts – to handle the highly corrosive fluid. As titanium is “a difficult material to work with,” it must be cast under a full vacuum using copper crucibles to prevent the molten titanium from attacking the crucible walls, elaborated the firm.

Amarinth has “a strong relationship” with its supply chain enabling it to procure hard-to-source titanium components, while the UK has “one of only a few foundries in the world” with the capability to cast the large titanium components necessary for the pumps.

These API 610 OH2 pumps will be ATEX Zone 2 certified for hazardous areas with IECEx-certified motors. With limited space within the FPSO vessel, Amarinth pointed out that the design includes a bespoke baseplate that incorporates a local control station within its footprint.

The pumps will be supplied on a tight 38-week lead time, which is necessary to fit the FPSO build being undertaken in China, and combines the new build, multi-purpose hull with several standardised topsides modules.

In October 2022, SBM Offshore confirmed the construction of topside modules for the FPSO One Guyana, its largest so far, started in September 2022. Two steel strike ceremonies were held in both Keppel FELS and Dyna-Mac yards to mark this milestone.

This FPSO will be used for the Yellowtail development project, which comprises six drill centres and up to 26 production and 25 injection wells. ExxonMobil sanctioned the project in April 2022 and followed it up with a contract confirmation with SBM for the supply of the FPSO for the project.

Located some 200 km offshore Guyana, the deepwater wells will be tied back to the FPSO One Guyana for processing. The FPSO is expected to perform produced water treatment functions as well as oil separation and gas injection.

With start-up slated for 2025, the FPSO One Guyana will have an optimum production capacity of 250,000 barrels per day (bpd) of oil; a storage capacity of two million barrels of crude oil; a gas treatment capacity of 450 million ft³ a day; and a water injection capacity of 300,000 bpd.

The operator of the Yellowtail project is Esso Exploration and Production Guyana Limited, an affiliate of ExxonMobil, with a 45 per cent interest in the block, while its partners, Hess and CNOOC Petroleum, hold 30 per cent and 25 per cent interest, respectively.

Saipem awarded new offshore contracts

15 Dec 2022

Saipem has been awarded new contracts in Guyana and Egypt for a total amount of approx. 1.2 billion USD.

The first contract has been awarded by ExxonMobil Guyana, subject to government approvals, for the UARU oil field development project, located in the Stabroek block offshore Guyana at a water depth of around 2,000 meters. The contract scope includes the design, fabrication and installation of subsea structures, risers, flowlines and umbilicals for a large subsea production facility. Saipem, who was previously awarded other four subsea contracts by ExxonMobil Guyanafor prior developments in the same area, namely Liza Phase 1 and 2, Payara, and Yellowtail, will perform the operations by using its vessels, including FDS2 and Constellation.

Subject to the necessary government approvals, project sanction by ExxonMobil Guyana and its Stabroek block coventurers and an authorization to proceed with the final phase, the award will allow Saipem to start some limited activities, namely detailed engineering and procurement.

The second contract has been awarded by Petrobel for the transportation, installation and pre-commissioning of 170 km of umbilicals for the Zohr Field, to be transported and installed between the central control platform (70 m water depth) and the subsea field (1,500 m water depth), connecting to the existing subsea production systems. The offshore campaign is planned to start during Q3 2023.

Source: Saipem

Norway hails historic carbon credit venture

Dec 7, 2022

See full statement from Norway’s International Climate and Forest Initiative:

A historic milestone was met on December 1st when it was announced that Guyana was the first country to get issued carbon credits under the new high-integrity carbon standard ART (Architecture for REDD+ Transactions). Guyana was issued 33.47 million forest carbon credits for preventing and reducing deforestation and forest degradation in the period 2016-2020.

The credits have been verified by a third-party against ART’s robust environmental and social requirements. The announcement marks an important step for how tropical forest countries can sell high-integrity carbon credits for preventing and reducing deforestation and forest degradation.

“I congratulate Guyana on being the first country to issue forest carbon credits certified by ART, paving the way for many others to come. This marks a breakthrough for the emergence of a high-quality global carbon market to protect tropical forests”, said Espen Barth-Eide, Norway’s Minister of Climate and Environment.

Guyana is the first country to conclude the ART process out of 15 jurisdictions that have so far entered the ART pipeline.

In a separate announcement the Government of Guyana announced that they had entered into a multi-year agreement worth at least USD 750 million with Hess Corporation for the purchase of 37.5 million credits. This translates into 2.5 million credits per year from 2016 to 2030, roughly a third of Guyana’s current and projected credit issuance.

Guyana’s long-term vision achieved

Norway and Guyana have collaborated on green development and forest conservation in Guyana since 2009. In this period, Guyana has successfully maintained one of the world’s lowest deforestation rates. Norway’s support to Guyana has added up to approximately USD 220 mill (NOK 1.5 billion at the time) in total for maintaining its low deforestation rate. The funding has provided support to Guyanas Low Carbon Development Strategy (LCDS), and the agreement was the first international commitment of financial support to the strategy, including activities such as the development of solar energy, climate adaptation, and strengthening Indigenous Peoples rights.

“It is great to see Guyana fulfilling its vision from 2009, to mobilise international private capital in support of its Low Carbon Development Strategy. Norway is proud to have been a partner of Guyana in this journey”, says Mr. Eide.

Guyana’s more than 18 million hectares of rainforests (almost one and a half times the area of England) are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent. Following the LCDS 2030, Guyana aims to maintain 99.5% of its forests.

High forest cover, low deforestation

A considerable portion of the world’s remaining tropical forests are found in countries like Guyana, with high forest covers and historically low deforestation rates (HFLD), collectively known as “HFLD-countries”. While forest carbon market and climate finance schemes historically have tended to focus on areas that have reduced high levels of deforestation this is now starting to change with the first ART credits issued to Guyana. The multi-year purchase agreement with Hess Corporation stipulates that there is significant demand from the private sectore to purchase high-integrity forest carbon credits from HFLD-countries such as Guyana.

“Guyana has demonstrated that it is indeed possible to protect rainforest over time. This is the result of dedicated, strategic work over more than a decade”, says Mr. Eide.

The revenues received by Guyana under the new agreement with Hess Corporation will finance Guyana’s LCDS 2030 plan, distributed according to a benefits-sharing mechanism, and will be used towards activities including renewable energy, village-based job creation and land titling, climate adaptation, and enhancing trade and market development for sustainable forestry and agriculture products

Exxon considers buying Carbon Credits

December 4, 20220

President Ali and ExxonMobil Guyana President Alistair Routledge at signing of a historic carbon credits sale agreement between Guyana and Hess Corp

United States oil titan ExxonMobil could soon follow its Stabroek Block partner Hess Corporation in buying Guyana’s “high-quality” carbon credits as part of its commitments to climate action.
Following the signing of a historic US$750 million deal by the Guyana Government for the sale of over 33 million certified carbon credits to Hess Corp. ExxonMobil Guyana President, Alistair Routledge, told media that trading carbon credits is among the options being considered by the oil major in its efforts to manage climate change.

“This is great news for Guyana. ExxonMobil is looking at lots of different ways to manage climate change and this [trading of carbon credits] is always going to be one of the considerations.”

Vice President Bharrat Jagdeo, who led Guyana’s negotiations with Hess, revealed that there are several proposals being put forward but Government wants to wait before striking another deal to allow for much more favourable market conditions for Guyana.

In a July 2022 progress report on Advancing Climate Solutions, the US-based ExxonMobil said it aims to achieve net-zero emissions from its operating assets by 2050 and is taking a comprehensive approach centred on developing detailed emission-reduction roadmaps for major operating assets.

This ambition applies to Scope 1 and Scope 2 greenhouse gas emissions. It builds on the oil company’s 2030 emission-reduction project, which include plans to reach net-zero emissions in its Permian Basin unconventional operations by 2030 and ongoing investments in lower-emission solutions, including carbon capture and storage, hydrogen, and biofuels.

“The company’s roadmap approach identifies greenhouse gas emission-reduction opportunities and the investment and policy needs required to achieve net-zero. The roadmaps are tailored to account for facility configuration and maintenance schedules, and they will be updated as technologies and policies evolve. Net-zero roadmaps for major assets are ahead of schedule and expected to be completed by year-end 2022,” the report stated.

As the operator of petroliferous Stabroek Block, ExxonMobil, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), along with its consortium partners Hess and CNOOC Petroleum Guyana Limited begun producing oil offshore in December 2019. Currently two floating production storage and offloading (FPSO) vessels pump oil.

However, the US oil major envisions about 10 FPSOs operating in the Stabroek Block, where 40 discoveries since 2015, amount to over 11 billion barrels of oil equivalent.

At the sale agreement signing with Hess, VP Jagdeo contended that there is no conflict in Guyana continuing to extract its fossil fuel resources with the country’s climate objectives.

“We support net-zero. We support early decarbonisation. We support the removal of subsidiaries from fossil fuel production. We support those global objectives… but in countries like Guyana, we have to secure our funding to continue to make our contribution to global climate change objectives [and to also] secure this country… and developing the oil and gas sector can allow us to get the revenues to fund the billions of dollars of adaption needs that we have to meet.”

Contending that the People’s Progressive Party/Civic Administration is committed to a balanced approach to development, he claimed that even with 10 FPSOs operating offshore Guyana, the country will still remain carbon negative given its vast pristine forest resources. Guyana is home to over 18 million hectares of forests that are estimated to store approximately 20 billion tonnes of carbon dioxide equivalent.

With the aim of monetising this resource, Guyana made history on December 1 by becoming the first country to receive certification of over 33 million carbon credits by the Architecture for REDD+ Transactions (ART). That issuance of the REDD+ jurisdictional carbon credits paved the way for signing of the sale agreement with Hess Corp.

This ground-breaking deal will see Hess buying 2.5 million credits per year for the period 2016 and 2032, valuing US$750 million. However, while the deal is for a 10-year period, that is, 2022 to 2032, the Guyana Government was able to negotiate, as part of the sale agreement, for the oil major to also purchase some 12.5 million carbon credits from the period 2016 to 2020 – referred to as “legacy credit”.

However, these 33.7 million credits being sold to Hess Corp represent just 30 per cent of the carbon sink contained in Guyana’s vast forest cover. The remaining 70 per cent of carbon credit will be put on the market for future sale agreements.

Hess pays $750m for carbon credits

Kim Biggar

December 5, 2022

Hess Corporation, which holds 30% interest in the Stabroek Block offshore Guyana through its subsidiary Hess Guyana Exploration Ltd., agreed to purchase a minimum of $750m of high-quality carbon credits from the Government of Guyana between 2022 and 2032. This agreement is intended to support Guyana’s efforts to protect the country’s 18m hectares of forest and provide capital to improve the lives of citizens through investments made by the government as part of its Low Carbon Development Strategy 2030.

The multi-year agreement will be managed through REDD+ (Reducing Emissions from Deforestation and Degradation), a framework created by the UNFCCC Conference of the Parties to guide activities in the forest sector. Hess will buy 37.5m REDD+ jurisdictional carbon credits, which will be recorded on the ART (Architecture for REDD+ Transactions) registry and independently verified.

The purchase of these carbon credits is part of Hess’ commitment to support global efforts to address climate change and for the company to achieve net zero greenhouse gas emissions by 2050.

President Irfaan Ali said the agreement “represents a massive step forward in showing the world that developing countries can lead the way to global solutions.”

Some of the $750m will be set aside for developments in Indigenous communities said Guyana’s Vice President Bharrat Jagdeo.

The government has said it aims to develop similar partnerships with other oil and gas companies. Alistair Routledge, president of ExxonMobil Guyana, said his company will consider buying carbon credits. “ExxonMobil is looking at a lot of ways to manage climate change and this is always going to be one of the considerations.”

Income from forest preservation

December 3, 2022

–Hess signs agreement to pay a minimum of US$750M for carbon credits
–VP Jagdeo says country could earn more based on market changes
HESS Corporation signed an agreement with Guyana to pay a minimum of US$750 million to purchase 30 per cent of the country’s high-quality, REDD+ jurisdictional carbon credits.

–Hess signs agreement to pay a minimum of US$750M for carbon credit

The purchase of carbon credits is an important part of Hess Corporation’s commitment to support global efforts to address climate change and for the oil giant to achieve net zero greenhouse gas emissions by 2050.

Guyana has over 18 million hectares of forests, storing an estimated 20 billion tonnes of carbon dioxide equivalent. Cognisant of the benefits of forest resources, Guyana and other developing countries seek compensation for their role in protecting the earth from greenhouse gases emitted mainly by large, industrial countries.

The Architecture for REDD+ Transactions (ART) had issued the world’s first The REDD+ Environmental Excellence Standard (TREES) credits to Guyana, marking the first time a country has been issued carbon credits specifically designed for the voluntary and compliant carbon markets for successfully preventing forest loss and degradation – a process known as jurisdictional REDD+.

“Following completion of an independent validation and verification process and approval by the ART Board of Directors, ART has issued 33.47 million TREES credits to Guyana for the five-year period from 2016 to 2020,” ART said in a press release.

Guyana secured its first sale of carbon credits, marking the culmination of a far-reaching vision, which was initially outlined in 2007 by then President, now Vice-President, Dr. Bharrat Jagdeo, who lobbied for financing for climate services. His vision led to the creation of the first Low Carbon Development Strategy.
The signing of the milestone agreement between Hess and Guyana for carbon credits, took place at State House, where President, Dr Irfaan Ali was joined by Vice-President Jagdeo and Chief Executive Officer (CEO) of Hess Corporation, John Hess.

Hess signed on behalf of his corporation, while Permanent Secretary of the Office of the President, Abena Moore, signed on behalf of Guyana. Dr Ali said at the signing ceremony:

“Today’s announcement is not only bold and innovative, but is also part of Guyana demonstrating leadership on a very critical and important issue. Developing counties have the capacity to present solutions to global problems. This is a very historic day for Guyana, for Hess and more important for forested countries. The importance of the forest and their significance in the fight against climate change has consistently been championed by Guyana and our Vice-President, Dr Bharrat Jagdeo.”

GREAT RESPONSIBILITY
The President commended Hess for exercising great responsibility in being part of the solution for climate change, through climate financing that ensures the preservation of forests. Hess referred to the contract as a landmark agreement, crediting it to the hard work of the Vice President and President.

“Guyana is one of the most heavily forested countries in the world. We admire the efforts that Guyana has undertaken for years to protect the country’s forest, and the government’s constant efforts to combat climate change and provide a strong model for other countries, other businesses and other governments. We are pleased to support the country’s effort,” Hess said.

The historic multi-year agreement is for 37.5 million REDD+ jurisdictional carbon credits, current and future issuances. ART issued 33.47 million TREES credits to Guyana for the five-year period from 2016 to 2020. Hess is purchasing 30 per cent of this.

Guyana is the first to complete the ART process for generating high-integrity, Paris Agreement-aligned carbon credits that will allow the country to access market-based finance to continue to implement forest-stewardship strategies.

“The fact [is] that Guyana became the first country to be certified under ART TREE climate change framework. This has not happened by accident, it took hard work, long hours and strong commitment. Our commitment to climate change and protecting the forest is the main tool to work against climate change,” the President said.

The serialised credits, listed on ART’s public registry, are available to buyers on the global carbon market, including for use by airlines for compliance with the International Civil Aviation Organization’s global emission-reduction programme, CORSIA, as well as for use toward voluntary corporate climate commitments.

THE LEAST AMOUNT
While the least amount Guyana anticipates receiving from Hess is the US$750 million, the country could see itself receiving more money if the price of carbon credits rises on the global market. Vice-President Jagdeo said:

“Just to put things in perspective, we’re selling 30 per cent of the credits available to Guyana over the period 2016 to 2030 for a minimum of $750 million; that’s a floor.

“Why do we say minimum? Because based on parameters established in the agreement, should there be movement in prices, we will share 60 per cent of the upside in movement of those prices. So, we anticipate the market to grow, the value of credit to grow in the future years and the agreement that we’re signing with Hess would allow us to share those upside benefits. There is a deep sense of satisfaction to see how far we have come as a country, from the early days when a lot of discussions took place about the role of forests as a potential [climate change] mitigation.”

Deforestation of tropical forests accounts for approximately 20 per cent of global annual greenhouse gas emissions. Understanding this, for years, Dr Jagdeo had campaigned for emphasis to be placed on tackling the emission that came from deforestation with the same global attention being given to mitigation efforts against other sources of emissions, and for it to be followed up with adequate financial mechanisms to ensure that it is viable.

“We pointed out that only [a] jurisdictional scale model could deliver lasting benefits, while the world were enamoured with project-based solutions. We said these forests have a value and that value must be recognised by the rest of the world. We came up with a figure and we said this figure is what it will take to outcompete alternative use of the forest.”

Guyana first tested this model when it inked an agreement with Norway in 2009 for a forest-protection deal between the two countries.

“It has been a long walk coming over 15 years; this is why we are so pleased today, we are evolving closer to the compliance market,” Dr Jagdeo noted.

Guyana’s completion of the ART process paves the way for other governments, which are looking to receive carbon-market financing for success in protecting and restoring its forests. Currently, 14 other countries and large sub-national jurisdictions are working towards their own issuances of TREES credits.

Gas-to-Energy project

The project is expected to cut electricity cost by at least half, as well as promote a transition to cleaner, renewable energy sources. This is in keeping with the government’s commitment to significantly reduce the country’s reliance on fossil fuels.

The project is expected to have a life cycle of 25 years.

November 30, 2022

Natural Resources Minister, Vickram Bharrat disclosed that the Wales Gas-to-Energy Project is on track for completion by the committed deadline of December 2024.

In response to an inquiry concerning any agreements signed in relation to the project, Minister Bharrat, revealed that a heads of agreement (HoA) has been signed with the Stabroek Consortium, ExxonMobil, Hess, and CNOOC Limited.

The tentative agreement was signed on June 30, 2022 and establishes the principles and conditions for the commercial and technical arrangements of the project.

The response reads, “There are other agreements on supply, buyer’s agreement, field development, licensing conditions, onshore works, and land matters that are currently being drafted.”

These policy documents and agreements will be presented once they are finalised and executed.

According to the minister’s written response, “All agreements are being done in a timely manner to meet the Final Investment Decision which will allow for the project to be completed by our committed deadline of December 2024.”

The minister noted that the first Environmental permit for the Gas-to-Energy Project was approved and signed by all parties. The authorisation was granted to Esso Exploration and Production Guyana Limited (EEPGL), and allows for the transmission of natural gas onshore from the Liza field in the Stabroek block.

According to the Environmental Protection Agency (EPA), approval was granted based on the following grounds:

The Environmental Assessment Board reviewed and declared the Environmental Impact Statement and Environmental Impact Assessment related to this project, acceptable in accordance with section 11(13) of the Environmental Protection Act, Cap. 20:05.

The EPA is satisfied that the project can be conducted in accordance with good environmental practices, and in a manner that avoids, prevents and minimises any adverse effects which could result from the activity.
The technical reviews and recommendations from a team of independent International Experts, the public inputs at the scoping stage, views expressed by members of the public during consultations, the submissions made after the EIA was submitted for public review, and all other relevant considerations, indicate that the project is environmentally-sound and in the public’s interest.

GUYANA