Installation work for SBM Offshore’s FPSO for ExxonMobil

May 18, 2022, by Nermina Kulovic

FPSO operator SBM Offshore shared a video of scenes from an installation campaign on its Liza Unity FPSO, which is working on the ExxonMobil-operated Stabroek block located offshore Guyana.

SBM Offshore revealed that the multi-purpose deepwater construction vessel, the Normand Installer, was used for the installation campaign for the Liza Unity FPSO prior to it achieving the first oil The company pointed out that this is a demonstration of its full-lifecycle approach.

ExxonMobil kicked off the first production from the second phase of its Liza project, using the Liza Unity FPSO in February 2022, making it Guyana’s second offshore development now in production. Production at the Liza Unity is expected to reach its target of 220,000 barrels of oil later this year.

In April 2022, the Government of Guyana received its first entitlement lift of the Unity Gold crude from the Liza Unity following the sale of its first share of crude oil from the country’s second offshore oil development. The first cargo of Guyana’s lifting entitlement was sold to ExxonMobil and this lift was a one-off arrangement for the company.

During the same month, ExxonMobil announced three more discoveries offshore Guyana, increasing its estimate of the recoverable resource for the Stabroek Block to nearly 11 billion oil-equivalent barrels.

The three discoveries are located southeast of the Liza and Payara developments and bring to five the discoveries made by ExxonMobil in Guyana in 2022. Two oil discoveries at Fangtooth-1 and Lau Lau-1 wells were announced in early January 2022.

 

 

TechnipFMC gains further subsea work for Yellowtail project

May 5, – TechnipFMC

 

NEWCASTLE-UPON-TYNE, UK — Esso Exploration and Production Guyana has contracted TechnipFMC to supply six HP/HT flexible risers for the Yellowtail development in the Stabroek Block offshore Guyana.

Subsea 2.0 (pictured) improves project economics and unlocks first oil and gas faster.

In addition, TechnipFMC has received notice to proceed with the previously declared contract for the subsea production system, following the Stabroek partners’ final investment decision on the project in April. The initial award was announced last November. For TechnipFMC, the “large” contract is between $500 million and $1 billion.

TechnipFMC will provide project management, engineering, manufacturing and testing capabilities for the subsea production system, comprising 51 enhanced vertical deepwater trees and associated tooling, plus 12 manifolds and associated controls and tie-in equipment.

The “significant” contract is between $75 million and $250 million for the Oilfield services giant. The majority of the total contract awards will be included in the Company’s second quarter inbound orders.

Jonathan Landes, President, Subsea at TechnipFMC, commented: “We are thrilled that our partnership with the Stabroek Block operator continues to grow. We have an established presence in Guyana to accommodate the level of activity there and we’re committed to further developing local capabilities.”

TechnipFMC currently employs 70 Guyanese and expects to continue to hire and train additional local staff in support of these awards.

ExxonMobil said that the Yellowtail project would produce about 250,000 barrels of oil per day starting in 2025. The FPSO to be built for the project will be named ONE GUYANA. This will be Guyana’s fourth FPSO, and the fourth delivered by SBM Offshore, after Liza Destiny, Liza Unity and Prosperity, under-construction.

 

CGX, Frontera discover light oil and gas condensate

Partners reap rewards of their efforts with reserves boost on Corentyne block.

09 May 2022

228 Feet (69 Metres) Of Net Pay Identified Across The Maastrichtian, Campanian, Santonian And Coniacian Horizons

Third-Party Analyses Indicate Light Oil In Santonian And Coniacian, Gas Condensate In Maastrichtian and Campanian:

• Kawa-1 Findings Are Consistent With Discovery Wells Reported By Other Operators Adjacent To The Corentyne Block
• Additional Potential Exists In The Central Channel Complexes Between Wei-1 And Kawa-1 And Is The Focus Of Ongoing Technical Work
• Kawa-1 Results De-Risk Equivalent Oil Targets Anticipated At The Wei-1 Exploration Well, Expected To Be Spud In 3Q’22

CGX Energy and Frontera Energy, joint venture partners in the Petroleum Prospecting License for the Corentyne block offshore Guyana, announced integrated results from the Kawa-1 exploration well offshore. The Kawa-1 well was drilled in water depth of approx. 355 metres (1,174 ft) to a total depth of 21,578 feet (6,577 metres) in the northern portion of the Corentyne block.

‘The Joint Venture is pleased to announce that it has successfully discovered light oil in the Santonian and Coniacian and gas condensate in the Maastrichtian and Campanian at the Kawa-1 exploration well, offshore Guyana,’ said Gabriel de Alba, Chairman of Frontera’s Board of Directors and Co-Chairman of CGX’s Board of Directors. ‘The Kawa-1 discovery adds to the growing success story unfolding offshore Guyana and the integrated Kawa-1 well results further support our belief in the potentially transformational opportunity the Joint Venture has in one of the most exciting basins in the world.’

The joint venture encountered hydrocarbons in multiple zones extending from 15,216 feet (4,638 metres) in the Maastrichtian to 21,547 feet (6,568 metres) in the Coniacian. Essentially every sand encountered over this interval indicated the presence of hydrocarbons. A total of 228 feet (69 metres) of net pay was found distributed throughout the Maastrichtian (68 feet/21 metres), Campanian (66 feet/20 metres), Santonian (76 feet/23 metres) and Coniacian (18 feet/5 metres) horizons with individual pay zones up to 35 feet (11 metres) thick.

Following completion of drilling activities at the Kawa-1 exploration well, the Joint Venture engaged independent third-party laboratories and experts to complete detailed studies, refined mapping and analyses to provide opinions on reservoir quality and hydrocarbon type.

This integrated analysis has provided further support for the Joint Venture’s initial interpretations that the Kawa-1 exploration well successfully discovered light oil in the Santonian and Coniacian and gas condensate in the Maastrichtian and Campanian as supported by cuttings, mud gas and annulus fluid analysis.

The findings are consistent with discovery wells reported by other operators surrounding the northern portion of the Corentyne block and de-risks the forthcoming Wei-1 exploration well, expected to be spud in 3Q’22.

 

Wei-1 Exploration Well

The Joint Venture continues to integrate detailed seismic and lithological analysis and pore pressure studies from the Kawa-1 well into preparations in advance of drilling the Joint Venture’s second exploration well, called Wei-1, in the third quarter of 2022, subject to rig release from a third-party operator.

The Wei-1 exploration well will be located approx. 14 kms northwest of the Kawa-1 exploration well in the Corentyne block, approx. 200 kms offshore from Georgetown, Guyana. The Wei-1 exploration well will be drilled in water depth of approx. 1,912 feet (583 metres) to a targeted total depth of 20,500 (6,248 metres) and will target Campanian and Santonian aged stacked channels in a western channel complex in the northern section of the Corentyne block. Information gained at Kawa-1 has improved the chance of success at Wei-1 from 29% to 56%. Data from the Kawa-1 and Wei-1 exploration wells, will inform future activities and potential development decisions.

CGX continues to assess several strategic opportunities to obtain additional financing to meet the costs of the drilling program.

Central Channel Complexes

Based on the Kawa-1 discovery and a better understanding of the tie between seismic and rock type in the northern portion of the Corentyne block, the Joint Venture has identified additional Maastrichtian, Campanian, and Santonian potential in the central channel complexes between Wei-1 and Kawa-1. The central channel complexes are the focus of ongoing technical work.

Source: Frontera Energy

 

 

Houston OTC 2022: Critical role of deep water in the energy mix

Craig Fleming, Technical Editor, World Oil 5/5/2022

Energy demand is expected to increase, and deepwater oil and gas will play a critical role in the energy mix in the future, ExxonMobil Vice President of Deepwater Jeff Weidner said during an executive dialogue at the Offshore Technology Conference.

“Because energy is a key link for human development, economic progress and the overall quality of life, we expect energy demand to increase.”

The expectation is that there will be a strong demand for oil and gas too, but the industry is not investing enough to meet projected demand. And operators can no longer just consider profitability and rate of return. They must also consider carbon output of the project over its entire life cycle. ExxonMobil is going to streamline its deepwater portfolio using a new set metrics during field development to lower carbon footprint and GHG emissions.

“Deepwater developments are unique, the wells are prolific, high-flowing properties that produce a significant amount of oil in a relatively short period of time. However, we need to shorten the time between discovery to first oil. The increase pace of development places a strain on our engineering teams involved in the project and the ability to deploy new technologies. And we must use new methods and systems only when the value exceeds the cost. In some cases, applying new technology is counterproductive and can slow time to first oil.”

South America. ExxonMobil is focusing its deepwater effort in Guyana. The company has reported 18 deepwater discoveries since 2015, including three in April. The company achieved first oil on one in 2019 and the second earlier this year. ExxonMobil is working to bring its deepwater discoveries onstream as quickly as possible.

“We want to shorten the timeline from seven years down to four or even three years. The increased pace of development at the Guyana projects has put enormous pressure on our subsurface organization. However, the effort has paid off and ExxonMobil expects to recover 11 billion barrels of oil from the Guyana field.”

Regional impact.

“A good relationship with the local government is paramount, If local authorities are aligned with the operating company, it produces a win-win situation for both entities. To date, we have created employment for 3,600 Guyanese citizens and injected $600 million in the local economy. The project has also elevated the quality of life for ExxonMobil employees and our contractors that are focused on long-term sustainability.”

 

 

Offshore Technology Conference

May 2, 2022

Minister of Natural Resources, Hon. Vickram Bharrat, Chief Executive Officer of GO-Invest, Dr. Peter Ramsaroop, United States Ambassador, Her Excellency Ambassador Sarah-Ann Lynch and Honorary Consul General of Guyana, Mr. Lutfi Hassan officially led the ribbon cutting ceremony to mark the grand opening of the Guyana booths at the Offshore Technology Conference (OTC)- the largest oil and gas sector trade show in the world.

Guyana is participating at this international conference for the third time . The show is a four-day event from May 2nd to May 5th, 2022 in Houston, Texas.

The Government of Guyana through GO-Invest collaborated with private sector oorgansations and businesses that formed the Guyana delegation attending OTC 2022. GO-Invest’s Head of Marketing, Research and Advocacy, Ms. June Ann Kowlessar organised and coordinated the logistics on behalf of Guyana’s Contingent at OTC.

The Guyanese contingent comprises Minister Bharrat, Foreign Secretary, Mr. Robert Persaud and Dr. Ramsaroop on the government side; Associations, AMCHAM, GCCI, PSC, GMSA and Private Businesses; GKB, GAICO, Guyana Logistics & Support Services, GOGEC, GYSBI, PRIEMEIR Insurance Inc, Express International Inc, GBTI, Atlantic Ventures Inc, NRG Holdings, New Hayven, Smart Infrastructure, International Energy Conference & Expo Guyana, ExxonMobil Guyana and Halliburton. Over 80 participants are expected from Guyana and others from the diaspora.

The OTC’s flagship conference is held annually at NRG Park in Houston. The OTC is the world’s foremost event for the development of offshore resources and displays leading-edge technology for offshore drilling, exploration, production, and environmental protection. OTC is sponsored by 13 industry organisations and societies, who work cooperatively to develop the technical programme. OTC also has endorsing and supporting organisations.

Participation at OTC allows for Guyanese businesses to learn and seek partners in pursuit of emerging opportunities in the country and will bring more supply chain opportunities to Guyana’. A critical element of this mission is education, connection and networking. The conference has the attendance of energy professionals, engineers, executives, operators, scientists and managers from across the world and all fields in the offshore energy sector. Industry leaders will discuss licensing and business opportunities, as well as recently introduced technologies.

Events are scheduled to maximise every opportunity to showcase and attract investment opportunities to Guyana. A Guyana Evening of Information Sharing and Networking, on May 04th at the Asia Society Texas Center is sponsored by Exxon Mobil.

Presentations will be made by the Minister of Natural Resources, Exxon Rep, US Ambassador to Guyana and the CEO of GO-Invest to headline the event. The Guyana Evening is an invitation-only event. Approximately 300 representatives from international and local companies are expected to meet the Guyanese Delegation.

Participants from public and private sectors will use the opportunity to network and develop relationships with key persons within the industry to attract investment primarily to Guyana’s Oil and Gas and Services sectors and establish and develop crucial partnerships.

The Memorandum of Understanding (MOU) is expected to be signed among various companies to forge ties in their commitment to build mutual partnerships and transform creative and innovative ideas to capitalise on the investment opportunities landscape.

On May 02nd the Airport Signing Agreement between the Houston Airport System and the Cooperative Republic of Guyana represented by Chief Executive Officer of Cheddi Jagan International Airport, Mr. Ramesh Ghir will take place.

On May 03rd the signing of a MOU between Euro Circuit Technologies SDN BHD and local Guyanese joint venture partner PCPG Inc. is scheduled. In attendance will be the Ministry of Foreign Affairs led by Foreign Secretary, Mr. Robert Persaud and the Embassy of Malaysia.

Minister Bharrat will be featured at James A. Baker III Hall, Rice University, where he will deliver a key note address on Guyana: perspectives on energy policy. Following, the Minister will lead a feature on the “Around the World Series Panel Discussion on Promoting Investment for Guyana’s Petroleum Sector Through Beneficial Local Content Goals: Maximizing Business Opportunities and Profitability. With the enactment of the Local Content Law, Guyana is ensuring that businesses benefit from the opportunities developing from the petroleum economy. Through the establishment of institutions and regulatory frameworks, the Guyanese economy is the optimal destination for beneficial investment in the oil and gas supply chain for Latin America and Caribbean Region. The panel will be moderated by Economist and Executive Director of the Georgetown Chamber of Commerce and Industry Mr. Richard Rambarran. Supporting speakers are: Senior Petroleum Coordinator, Petroleum Management Programme Mr. Gopnauth Bobby Gossai, Jr., Director, Local Content Secretariat, Mr. Martin Pertab, Alistair Routledge, President of ExxonMobil Guyana, Managing Director, Environmental Management Consultants, Mr. Shyam Nokta, Director for NRG Holdings Inc., Mr. Nicholas Deygoo and, Zulfikar Ally, Minister Counselor/Deputy Ambassador, Embassy of Guyana.

On May 04th, Minister Bharrat, Dr. Ramsaroop and Ambassador Lynch will deliver feature addresses at the boardroom session, Ambassador Insight Series.

OTC provides the opportunity for companies to develop business relationships and tap into emerging regions vital to offshore development. Guyana has unmatched success with over 11% of the world’s recent oil discoveries . Guyana is not hitching on the bandwagon of Oil and Gas alone but is also marketing its traditional sectors, Agriculture, Tourism, ICT and Manufacturing, Services.

This year the country has a few new companies on board representing an array of diversified sectors, “we have the banking sector, insurance, logistics and support services. We are all here to market our beautiful Guyana in support of our President’s One Guyana initiative. Guyana is the place to be, we are the Region’s most exciting investment destination and are inviting everyone to be a part of our transformative growth,” Dr. Ramsaroop said.

 

OTC 2022 GCCI Executive Director moderates panel discussion

May 3

Executive Director of the Georgetown Chamber of Commerce and Industry (GCCI), Richard Rambarran represented Guyana as Moderator for the “Around the World” Panel at the Offshore Technology Conference (OTC) 2022.

He led the panel on “Promoting Investment for Guyana’s Petroleum Sector Through Beneficial Local Content Goals: Maximizing Business Opportunities and Profitability.” The panel featured seven speakers, including the Minister of Natural Resources, Hon. Vickram Bharrat, M.P; Senior Petroleum Coordinator | Petroleum Management Programme, Mr. Gopnauth Bobby Gossai, Jr; Director of the Local Content Secretariat, Mr. Martin Pertab; President of ExxonMobil Guyana, Mr. Alistair Routledge; Managing Director of Environmental Management Consultants, Mr. Shyam Nokta; Director for NRG Holdings Inc, Mr. Nicholas Deygoo-Boyer; and Minister Counselor/ Deputy Ambassador of Embassy of Guyana, Mr. Zulfikar Ally.

With the enactment of Local Content Law, Guyana is ensuring that local businesses benefit from the opportunities developing from the petroleum economy, through the establishment of institutions and regulatory frameworks. With all of this development, the economy is the optimal destination for beneficial investments in the oil and gas supply chain for Latin America and Caribbean Region.

Mr. Rambarran is part of the Guyanese delegation at the OTC and is representing the GCCI and its 24 member companies, who are present at the conference.

 

 

MoU with Houston Airport System

May 04, 2022

…To maximise aviation development, trade

A Memorandum of Understanding (MoU) was officially signed on May 2, 2022, between the Government of Guyana and the Houston Airport (HAS), System, following months of dialogue.

This announcement was made in a press release from the Cheddi Jagan International Airport Corporation (CJIAC).
The MoU, which was signed on the sidelines of the Offshore Technology Conference in Houston, Texas, has established a mechanism between the two parties to strengthen collaboration and promote the expansion of a safe, modern and efficient airport system.

Guyana hopes to reap maximum benefits by inking MoU with Houston Airport System. Minister of Natural Resources, Vickram Bharrat and US Ambassador to Guyana, Sarah-Ann Lynch, applauded this partnership, which paves the way for the exchange of expertise in the areas of operation, economic development and advancements of both airports.

They expressed optimism that by working together the airports will be better positioned to increase airlift between Guyana and Houston via the introduction of new airlines and increased frequencies from the existing carriers.

Chairman of CJIAC’s Board of Directors, Sanjeev Datadin signed the agreement on behalf of the Government. He described the event as a red-letter day in the history of aviation development in Guyana. This partnership will accelerate the developments already taking shape, in Guyana, more specifically at the Cheddi Jagan International Airport.

“Partnerships, such as this, are essential for the sustainability of the aviation sector.”
CEO, Ramesh Ghir, who is also present in Texas, said the Houston Airport System presents an opportunity for Guyana to increase its connectivity to the rest of the world.
“HAS is ranked as one of the largest airport systems in the world, which means that such allies in the aviation sector can further increase Guyana’s potential to promote and market itself as being among the top travel and investment destinations.”

The Cheddi Jagan International Airport (CJIA) is expected to benefit immensely from this new agreement with the exchange of technical expertise and support between Guyana and Houston. The HAS provides a safe and dynamic air services network that fosters economic viability for the aviation (transportation) industry.

Witnessing the signing were Dr. Peter Ramsaroop, CEO of Go-Invest, Mr. Lutfi Hassan, Guyana’s Consulate to Houston, and other representatives in Houston, Texas, representing Guyana at the Annual Offshore Technology Conference.

 

 

3 Oil Discoveries on Stabroek Block

April 26, 2022

The Government of Guyana through the Ministry of Natural Resources, is pleased to announce three oil-field discoveries by Exxon Exploration and Production Guyana (EEPGL) and partners at Barreleye, Patwa-1, and Lukanani-1 Wells Offshore in the southeast portion of the Stabroek Block.

In compliance with the principles of transparency and accountability, the GoG welcomes the continued success of exploration and discovery by EEPGL and its partners within the Stabroek Block which has now produced five discoveries in 2022.

• The Barreleye-1 well encountered approximately 230 feet (70 meters) of hydrocarbon-bearing sandstone and was drilled in 3,840 feet (1,170 meters) of water.
• Patwa-1 intersected 108 feet (33 meters) of petroliferous sandstone and was drilled in 6,315 feet (1,925 meters) of water.
• The Lukanani-1 well encountered 115 feet (35 meters) of hydrocarbon-bearing sandstone and was drilled at a water depth of 4,068 feet (1,240 meters). Operations are ongoing at Barreleye-1 and Lukanani-1.

Natural Resources Minister, Hon. Vickram Bharrat, MP; stated that the new discoveries add to Guyana’s growing legacy as an oil-producer and exporter with ‘medium sweet crude.’ This will catalyze the One Guyana goal of enhanced infrastructure, world-class health care,and education realizing a higher standard of living and better quality of life for all .. The Government remains vigilant and committed to ensuring the benefits of petroleum resources benefit all, paving the way for a thriving future for generations ahead.

The Ministry of Natural Resources and the Government welcome three discoveries offshore, totaling 31 discoveries within the Stabroek Block and 36 discoveries overall. These will strengthen Guyana as a petroleum producer, while guided by good international oil field practices for effective and efficient governance.

ExxonMobil has four projects developing the recoverable resource offshore .

Liza Phase 1 is producing approximately 130,000 barrels per day utilizing the Liza Destiny floating production storage and offloading (FPSO) vessel.

Liza Phase 2 is ramping up towards its capacity of 220,000 barrels per day using the Liza Unity FPSO.

Payara, the third project, is scheduled to begin production at the end of 2023 with a capacity of 220,000 barrels per day from the Prosperity FPSO, under construction in Singapore.

Yellowtail, the fourth project, is expected to produce 250,000 barrels per day when the ONE GUYANA FPSO comes online in 2025.

 

 

First withdrawal from Natural Resources Fund

 10 May 2022 Denis Chabrol

Government withdrew US$200 million (GY$41.7 billion) from the Natural Resource Fund (NRF), the first drawndown from oil revenues. Finance Minister Dr. Ashni Singh said that the money was transferred from the NRF to the Consolidated Fund to “finance national development priorities.” US$407.6 million would be transferred during this fiscal year in keeping with the 2022 National Budget. The Finance Ministry said,

“This transfer was made in accordance with the strengthened legal architecture of the NRF Act 2021 and follows the publication in the Official Gazette of all petroleum revenues paid into the Natural Resource Fund during the period 1 January to 31 March 2022,”

NRF Act 2021 which came into operation on 1 January 2022, represents a significant improvement in transparency and accountability and the overall management of the natural resources wealth of Guyana for present and future generations. Under the Chairmanship of Retired Major General Joseph Singh, the NRF Board is made up of parliamentary representative Dunstan Barrow, private sector representative Ramesh Dookhoo and Carolyn Rodrigues and British parliamentarian David Lammy of Guyanese origin, two members along with Mr. Singh chosen by the President. The parliamentary opposition is entitled to a representative on the NRF Oversight committee .

 

 

Modec enters new ExxonMobil floater contest

9 May 2022

Floater companies are engaged in pre-FEED competition for fifth development in the Stabroek block

Silica City
April 29, 2022

Minister of Housing and Water, Collin Croal, M.P, told the United Nations’ (UN) High Level Meeting of the General Assembly in New York about Guyana’s aggressive housing programme and plans for the development of the new ‘Silica City.’ The high-level meeting was convened to assess the progress of the implementation of the UN’s New Urban Agenda..

Guyana has seen a continuous reduction in the ratio of the urban population to the total population and a reduction in rural-urban migration as development in rural areas accelerated over the last two decades.

“This is due in part to the implementation of an ambitious country-wide housing programme, premised on a number of key actions, including countrywide distribution of house lots, the development of new housing schemes and improving access to finance for low-income earners. “

Government is focused on further transforming Guyana, through the application of globally established principles of sustainable development. With Georgetown being below sea level, government is moving ahead with plans to establish the new ‘Silica City’ along the Linden-Soesdyke Highway. The establishment of this new urban centre is a brainchild of His Excellency, Dr. Mohamed Irfaan Ali. The projected population over the next 20 years will be approximately 50,000 or 12,500 households. Therefore, within the first five years, it is expected that the city would be developed to cater for at least 3,125 households.

This will serve as a progressive model for similar developments. Guyana has underscored the need for adequate financing for the full implementation of the New Urban Agenda, including international partnerships.

“We affirm our commitment to the objectives of the New Urban Agenda and to maintaining a constructive and innovative approach to issues of urbanisation.”

The government is focused on further transforming Guyana, through the application of globally established principles of sustainable development. The new and expanded Low Carbon Development Strategy (LCDS) 2030 elaborates priorities to stimulate growth in a sustainable manner. This includes implementing Sustainable Planning and Urban Development policies that address some of the challenges in urban areas, including improper solid waste disposal, flooding and inefficient modes of transit.

 

Energy Benefits

April 29, 2022

Dr. Ashni Singh, Senior Minister in the Office of the President with responsibility for Finance, said thousands of citizens are already enjoying the benefits of the oil and gas sector, directly or indirectly. While most beneficiaries are in Regions Three and Four, this will soon change.

“It is for that reason that we have committed ourselves to ensuring that the economic development that will flow from oil and gas is geographically decentralised.”

This is the reason for the President’s recent announcement of major investments in Berbice like the new commercial centre and provision for co-investments in other regions.

“We want to make sure that in those regions too, the positive consequences of the oil and gas sector are visible and are felt. We want young people in Berbice, Essequibo, Linden and our hinterland regions, to also see, experience and participate in and benefit from what’s happening in the sector.”

Speaking about ways in which citizens are benefitting, Dr. Singh stated, “ the benefits of the oil and gas sector are already being seen through multiple channels, through the jobs that are being created, through the private sector expansion that we are witnessing, and through the public expenditure that we are able to incur as a result of the expansion of the economy, and as the result of the mobilising of our oil revenues.”

Hundreds of young Guyanese are employed by ExxonMobil and their many contractors and received training locally and internationally. Onshore companies such as Guyana Shore Base Inc., Saipem, SBM Offshore, Baker Hughes Guyana and others continue to employ and train Guyanese.

“All of these are major international companies. They are big players globally, they have come to Guyana, they have established operations; they are recruiting Guyanese people; they are training Guyanese people and Guyanese people are accumulating expertise and that expertise will redound not only to their benefit today, in terms of the job that they are doing, but will redound to their individual benefit in the long – term.”

Providers of goods and services are also benefitting.

The Natural Resources Fund and allocations from the 2022 budget laid the foundation for major transformational projects.

“We are planning a major infrastructural transformation, major highways, including the Linden to Mabura Road and the 32 concrete bridges from Kurupukari to Lethem, the overhaul of the Corentyne highway, the new Demerara River Bridge and the gas to shore project.”

Local Content Legislation also makes provision for a minimum threshold in 40 key areas which is generating business opportunities. The minister is urging Guyanese to prepare themselves to benefit from the opportunities by taking advantage of skills and other training opportunities in which the government is investing.

 

 

UNDP Report

Apr 12, 2022

United Nations Development Programme (UNDP) reported in 2016 that Guyana has power to improve the 2016 ExxonMobil deal and no provision is off limits. Oil contracts are not set in stone. If fiscal arrangements leave a country holding the short end of the stick, renegotiation is not unreasonable.

Author Anthony Paul, of the Association of Caribbean Energy Specialists Ltd. noted that one of the basic rules of contract renegotiation is that when one party opens an agreement for review; all terms are up for discussion.   It means that Guyana during its review of the ExxonMobil oil deal in 2016 was in a position to renegotiate to the state’s benefit, all fiscal terms. Nothing was off limits.

For future contracts, it was recommended that Guyana puts in place a strategy for renegotiating contracts. This must include engaging an experienced negotiator, to train and mentor staff from the Ministry and other agencies, involved in contract negotiations.

Authorities must seek clarity on terms to review, regardless of the security of certain terms.  Guyana may want to review terms that relate to the extension of licences, sale of assets, opportunities to capture capital gains taxes, local content and capacity development, procurement rules and strategies, cost recovery limitations, etc.

CHATHAM HOUSE
Chatham House is another international agency which advised Guyana to input renegotiation and periodic review clauses in all oil contracts, to ensure transparency and accountability.

As a non-profit, non-governmental organisation based in London, its mission is to analyse and promote the understanding of major international issues and current affairs.  In its 2016 report, Chatham House said that the aforementioned clauses would allow renegotiation when specific triggers are activated. Such a move helps to maximise economic returns to the state.

Chatham House advised that Guyana and other emerging producers should design fiscal terms aligned with a national vision and ensure clear fiscal priorities. These must clearly articulate the fiscal terms that govern upstream petroleum activity.

“Emerging producers must also develop simple tax structures. Tax obligations should be defined in the tax code rather than in contractual agreements. This includes provisions for taxing capital gains earned by companies that sell or assign their rights or part of their rights before or during production.”

“New producers seeking capital for exploration should focus on requiring viable work programmes in order to encourage drilling activity. To attract and retain investors, the use of progressive, flexible fiscal formulas and royalties that respond to changes in profitability is particularly recommended.”

“Emerging producers must strive to reduce the knowledge asymmetries they encounter in negotiations with foreign oil companies. For example, governments can engage consultants or technical advisors to evaluate the baseline conditions for the award of acreage.

“To simplify negotiations, emerging producers should move as many contract elements as possible into laws and regulations that apply across licences.”

Chatham House said that new circumstances, such as a major discovery being made, or a rise in commodity prices, may prompt many producers to seek to change the terms of their contracts with foreign companies. Similarly, low prices may prompt companies to ask governments for revisions of terms. Governments should respect existing contracts and their first remedy, when changes become needed, should be to amend future licensing.

If the government so desires, it would be able to tap into the expertise of the International Senior Lawyers Project (ISLP). which helps countries insuccessful renegotiation of contracts on a pro bono basis. Over the past 17 years, with support from law firms, foundations and government agencies, ISLP has mobilised hundreds of experienced lawyers to provide over $100 million worth of pro bono legal assistance in support of just, accountable and inclusive development in over 80 countries.

The project successfully helped Liberia renegotiate contracts with Arcelor Mittal S.A., a steel manufacturer and American company Firestone Tire and Rubber. The group helped countries across the world in the renegotiation of oil contracts. ISLP provided support to the Attorney General’s Office for the review of Guyana’s Cyber Crime Bill and Electronic Transactions Bill.

Disparities between the deal Guyana signed with ExxonMobil and the agreement ExxonMobil signed with Ghana. underscore the need for Parliament to scrutinise the Guyana–ExxonMobil contract. The Ghana contract has an entire section dedicated to procurement laws, which ExxonMobil must follow. Those provisions are in place to ensure that a significant number of the local companies benefit from the oil sector. Guyana’s contract omits procurement laws. Hence calls for the contract to be renegotiated.

 

Guyana likely to favour bid round over creation of national oil company

Government expects to have a decision on which path to follow in the third quarter

3 May 2022,   Fabio Palmigiani