Exxon begins appraisal at Lau Lau-1

2024, 21 June Fabio Palmigiani

Standing tall, ExxonMobil began appraisal activities at a key discovery that hit one of the longest hydrocarbon columns offshore Guyana.

In early 2022, the US supermajor found approximately 96 metres of high quality petroliferous sandstone reservoirs during drilling of Lau Lau-1 exploration well in the prolific Stabroek block. The hydrocarbon column was longer than in ExxonMobil’s maiden discovery in Guyana, the giant Liza-1, which measured 90 metres. The company produces about 650,000 bpd from the offshore Stabroek block.], celebrating the 25th anniversary of activity in Guyana.

 

 

Stabroek Block is one in a lifetime, world class asset’

Jul 01, 2024 News

Vice President and Business Service Manager at ExxonMobil Guyana Limited (EMGL), Phillip Reitema, emphasized the unique value of the Stabroek Block, located offshore Guyana, where ExxonMobil Guyana is the operator with a 45% interest, Hess Guyana Exploration Ltd. holds 30% interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited holds 25% interest. Guyana has become one of the fastest growing economies in the world due to offshore oil production.

Asked how the Stabroek Block compares to other Exxon’ projects in terms of the return on investments, Reitema responded that Exxon has a very special opportunity in Guyana where the Stabroek Block provides, “a unique opportunity for all of us at Exxon and in our industry to have a really special impact on the country.”

Reitema has been working in Guyana for the past two years and came as the country is, “truly a once in a lifetime opportunity to come.” 

While Stabroek Block development is unique, there are other successful projects in the petroleum industry. but some might not have been able to ramp up production as quickly as Exxon in the Stabroek Block.

“But it’s really that combination of a world class asset, world class revenues with this development cycle that Guyana is on in this small population.”

The projects in Guyana compete internationally. “They are some of the best deepwater projects in the world, we are very proud of them. I know our chairman said we expect that the Guyana projects that we are doing in Stabroek will go down as one of the greatest deep-water projects in the industry’s history.”

June 2024, marks 25 years since Exxon entered Guyana. Reflecting on the company’s journey, Reitema revealed that since first discovery in 2015, the company already has three projects producing oil from the Stabroek Block.

“Today we are producing over 600,000 barrels a day and oil produced is revenue produced as revenue to be shared amongst the people of Guyana and our shareholder group. …then we have three other projects being developed, Yellowtail, Uaru and Whiptail.”

By the end of 2027, Exxon expects to have production capacity of over 1.3 million barrels per day (bpd). The Production Sharing Agreement (PSA) between Guyana and Exxon is the subject of ongoing debates.

Former Minister of Natural Resources, Raphael Trotman, under the APNU + AFC Coalition government 2015-2020, signed the deal in 2016 which waives all taxes from the oil companies, gives Guyana 2% royalty and agrees to the oil companies recovering 75% of investments before the remaining 25% is shared, with Guyana receiving 12.5%.

The arrangement, with the lack of ring-fencing, means Guyana pays for projects that are yet to commence production. Each month bills from future producing developments are added to the list of expenses to be cost-recovered by Exxon.

The battle of the oil giants is unfolding between ExxonMobil Corporation and Chevron Corporation over the Stabroek Block to determine who is a participant in one of the industry’s most successful deep-water developments. Hess Corporation agreed to sell all the company’s shares to Chevron, through a US$53 billion transaction, giving Chevron access to the Stabroek Block. ExxonMobil and CNOOC filed for arbitration since the oil giant believes it has preemptive rights, which allow shareholders access to stock before it is offered to others.

 

 

 

ExxonMobil unveils 30-well drilling campaign for Hammerhead

WO -July 16, 2024

Reuters reported that ExxonMobil is planning a potential 30-well drilling campaign for its Hammerhead project offshore Guyana and aims to start production in 2029, boosting Guyana’s oil production capacity to over 1.4 MMbpd. Exxon, along with consortium partners Hess Corp and CNOOC, expects Hammerhead to produce between 120,000 and 180,000 bpd, which is less than the 250,000 bpd from its largest vessels offshore Guyana.

The project will include a floating production unit, converted from a Very Large Crude Carrier (VLCC), capable of storing 1.4 to 2 MMboe, located 15 km (9 miles) southwest of Exxon’s Liza Destiny vessel.

Hammerhead, found in August 2018, is ExxonMobil’s ninth oil discovery in the prolific Stabroek Block .

 

 

 

FTC to delay Chevron-Hess deal until after ExxonMobil arbitration

Leah Nylen and Kevin Crowley, Bloomberg July 11, 2024

The U.S. Federal Trade Commission plans to delay its decision whether to block Chevron Corp.’s $53 billion takeover of Hess Corp. until after an arbitration case with Exxon Mobil Corp. is settled.The case with Exxon, which claims to have a right of first refusal over Hess’s biggest asset offshore Guyana, will likely take at least until the fourth quarter, meaning the FTC’s review will extend several more months. The agency plans to announce its decision when the arbitration is finished.

The delay is yet another blow to the embattled deal, which is still far from completion nearly nine months after it was announced in October. The agency made second requests for information for several large deals in the oil and gas sector this year.

Chevron and the FTC declined to comment. Chevron previously said it expected to have finished responding to the FTC’s in-depth request for information by mid-year.

“We continue to expect to complete the FTC review process during the third quarter,” Hess said.

Unless companies have an explicit timing agreement with the FTC, the agency has discretion on when to announce its decisions.

Shares of both companies fell on the news, pairing earlier gains. Hess was up 0.4% at 11:40 a.m., after earlier being up as much as 1.1% Chevron shares were up 0.6%, after rising 1% earlier.

The FTC allowed Exxon’s takeover of Pioneer Natural Resources Co. to move forward after alleging Scott Sheffield, Pioneer’s founder and former CEO, colluded with OPEC officials and blocked him from serving on the Texas oil giant’s board. Sheffield rejected the claims.

Chevron’s agreement to buy Hess, its biggest deal in two decades, faced several hurdles, leaving both companies in strategic limbo. In March, Exxon, which discovered and operates Guyana’s Stabroek Block, accused Chevron of attempting to “circumvent” its right to buy Hess’s 30% stake in the 11 Bbbl offshore oil fields. Chevron and Hess rejected the charge, saying Exxon’s right doesn’t apply because the deal is structured as a corporate takeover rather than an asset sale.

The case went to arbitration at the International Chamber of Commerce, a process that could take until the fourth quarter at the earliest. Exxon CEO Darren Woods has warned it could take longer.

In May, Hess investors approved the Chevron takeover by a razor-thin majority of 51% after several large shareholders and Institutional Shareholder Services Inc. argued the vote should be delayed until after the arbitration case. The investors expressed concern that they would not receive Chevron dividends until the deal is complete, eroding the value of the transaction.

 

 

Chevron, Hess reach “significant” milestone

July 03, 2024  (WO)

According to Reuters, a three-person arbitration panel has been finalized to address ExxonMobil’s claim against Chevron’s $53 billion purchase of Hess Corp over oil-rich assets offshore Guyana. This marks a significant step in resolving the uncertainty surrounding the merger, which Chevron and Hess hoped to complete in early 2024.

 

 

Exxon dispute in Chevron-Hess deal hinges on change of control  

Jul. 18, 2024 Carl Surran, SA News Editor

Exxon Mobil’s attempt to stop Chevron’s proposed acquisition of Hess rests on whether the transaction would involve a change of control of Hess’ Guyana subsidiary, Reuters reported.

Exxon asserts that Hess should have first given it the opportunity to purchase its stake in the prized Guyana asset, and its position is that the right of first refusal is triggered by a change of control in Guyana and that Chevron structured the deal in a way to bypass it.

Chevron and Hess  reportedly believe the Exxon argument has no merit because Hess would survive under a new Chevron and continue to own the asset.

“The crux here is whether a change of control even occurred,” Clark Hill Law oil and M&A expert James English told Reuters, and “a plain language approach would be very favorable to Chevron, while if you go with the intent, Exxon may have a case.”

The case is unique as Guyana represents 60%-80% of the $53B total Chevron offered for Hess , English and other experts have estimated.

 

 

 

US$2B can compensate Guyana, Trinidad and Venezuela for Exxon spill

Jul 24, 2024

Discussing the economic impacts a potential oil spill will have on Guyana and the Caribbean region and the insurance in place to compensate affected countries, Maria Skocik, ExxonMobil Guyana’s Projects Environmental and Regulatory Manager, assured that Guyana, Trinidad and Venezuela can be adequately compensated from the US$2B oil spill guarantee.

“First and foremost, we are committed to safe operations, both personnel safety and environment, so as Becky was mentioning, we are doing everything possible to ensure that no incidents happen. In the off chance they do occur, we have technical and financial capacity to be able to respond to those incidents.”

Measures are in place like insurances and there will be mechanisms activated to facilitate cleanup.

“So there are things like insurances in place, there will be mechanisms for cleanup and for grievances and for business to submit claims. .. In the way we design projects and the way we operate them, we do everything possible to prevent incidents from happening.”

Asked if an incident occurs, Guyana will get full coverage and also the affected countries like Trinidad or Venezuela, Skocik said,

“Yes, it absolutely does. So again, in an off chance an incident does happen, there will be a process for complete mitigation and mitigation of the area so there will be efforts to clean everything up and also support financially for parties that are impacted.”

The company often reveals its capacity to manage an oil spill in the event of a disaster in the 26,800 square kilometers Stabroek Block. Whenever questioned about the cost of an oil spill, it previously insisted that it will not walk away from the country but will handle associated cleanup and compensation. The US$2B oil spill Guarantee and Indemnity Agreement supersedes all previous assurances. The agreement with the Executive Director of the Environmental Protection Agency (EPA), Kemraj Parsram, explicitly outlines US$2B as the maximum amount to be provided by the Stabroek Block partners collectively.

“This Guarantee and Indemnity Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter and supersedes all oral statements and prior writings with respect thereto; provided that for certainty, it is acknowledged by the Beneficiary and the Guarantor that this Guarantee and Indemnity Agreement is not intended to and does not amend any term or provision of the Petroleum Agreement.”

Before the Government receives funds from the US$2B oil spill guarantee provided by ExxonMobil, Hess and CNOOC, Guyana (GoG) will first be required to write each of the three guarantors informing of the company’s failure to meet its legal financial obligations.

The Guarantee and Indemnity Agreement lodged by the Stabroek Block partners on June 9, 2023 makes it explicit, “In order for the Beneficiary (GoG) to exercise its rights under this Guarantee and Indemnity Agreement, the Beneficiary must provide to the Guarantor at the Guarantor’s address stated in Section 4.4, written notice, signed by an authorized representative of Beneficiary (the “Notice”), of EEPGL’s Default of the Environmental Obligation…”

The notice to the guarantor must detail the environmental obligation(s) that is (are) purported to have been defaulted on, including the legal basis giving rise to the environmental obligation(s) in question; how Exxon failed to satisfy the applicable Environmental Obligation(s) and the unpaid amount for which the company is liable for.

The government under the agreement must also notify the guarantor that the oil companies have been advised of its intent to draw the guarantee. At scoping meetings for new oil projects, the company also faced questions from the public on the safety of its operations and the economic impact of such an event.

 

 

Power China contracted to build Gas-to-Energy Control Centre

July 30, 2024

Power China, signed a new $8.6 Million US contract with the Government of Guyana to construct a building to house the National Control Centre, as the last phase of the Gas-to-Energy project proceeds.   The Chinese company was one of 3 competitive bidders shortlisted during the open tender process.

The building will be erected in Beterverwagting along the East Coast of Demerara by a multinational team. The project has a 13-month duration.

Permanent Secretary of the Office of the Prime Minister, Alfred King and Chief Representative of Power China, Dan Shen signed the contract.  Prime Minister Brigadier (Ret’d) Mark Phillips noted the role the building will play in the delivery of power from the project.

“This is important for the whole management of the transmission and distribution of the power from the Gas-to-Energy project. So, the people of Guyana, come 2025 will benefit from adequate electricity.”

The project will allow the government to deliver on its promise of easing the cost of living for citizens.

“The power from the Gas-to-Energy project would be reliable and the cost will go down. We promised that we would reduce the cost of electricity by 50 per cent and we will deliver on that promise.”

Minister within the Ministry of Public Works, Deodat Indar explained that several components of the nearly US $2 billion gas project are being prepared simultaneously. These include installation of deep-water pipelines, shallow-water pipelines, underground pipelines and transmission lines to transfer electricity to the control centre, building the Materials Offloading Facility in Wales, West Bank Demerara, construction of access roads and the power plant.

Kalpataru Projects International Limited (KPIL) of India is installing the 230 KV transmission lines

“Today, what we have done is to sign the last aspect of the entire leg of projects surrounding the Gas-to-Energy project…we have [KPIL] who is building the 230KV transmission line to bring it to Vreed-en-Hoop Substation and to bring it to Beterverwagting located behind Eccles…That there is now where this contract kicks in where we have the control centre building,” Minister Indar explained.

The minister disclosed a temporary building will be constructed to ensure the timeline is met.

“So, we will have to build a temporary one to make sure that we don’t miss the opportunity to dispatch once the power plant commences operations. Around December of this year that should be completed.”

Head of the Executive Management Committee of the Guyana Power and Light Inc (GPL), Kesh Nandlall said that the building will play a key part in the execution of the services of the GPL. It will aid the agency managing the power grids in a very efficient manner. It is intended to house the scanning equipment. It is a very important infrastructure for the development of the power sector going forward since it would be housing the engine of the grid.

 

 

 

Gas to Energy control centre to monitor power outages

July 4, 2024

To improve nationwide power reliability, the highly-anticipated Gas to Energy project includes the building of a state-of-the-art control centre in Eccles, East Bank Demerara which will use real-time monitoring to quickly identify and address power outages.

Dr Bharrat Jagdeo provided a comprehensive overview of the government’s plan to upgrade transmission, distribution and generation capacity.

“We are upgrading the whole system, and these would be smart grids. On the line itself, you have a fibre-optic cable that will be connected to the control centre. So, you won’t need to get a report when a blackout takes place anywhere else. [In] real-time, you can know from the control centre at Eccles…wherever in the country…or on the inter-connected grid, if you have a power outage, you can dispatch people immediately.”

The centre will also enable remote disconnections.

The Gas-to-Energy project, Guyana’s single largest investment, will supply of 300 megawatts of cleaner power at 50% less than the current price.  This project is divided into five components,

1. 1. 1. laying of the pipeline to bring the gas to shore,
      2. construction of the power plant and
      3. Natural Gas Liquid (NGL) facility,
      4. the installation of transmission lines,
      5. building of the control centre and upgrading of the distribution system.

“The transmission alone from the power plant will take power back to Vreed en Hoop to be distributed in Region Three, and to bring the power across the river to the control centre here at Eccles, where it will be dispatched to the rest of the country. That is one element of this project, and all five are being built simultaneously.”.

Last year, the government issued a public Request for Proposals for the construction of a national control centre to support the integration and dispatch of the new 300 MW combined cycle gas turbine (CCGT) Power Plant and allow the Guyana Power and Light (GPL) to supervise, manage and control the new and upgraded power system.

While admitting that the project and the execution of all these elements simultaneously is a massive undertaking, Dr Jagdeo assured that the project will be completed.

 

 

 

16 transformers for Gas-to-Energy, GPL enhancement projects in Guyana

Julyl 24, 2024

Sixteen transformers that are important to the much-anticipated Gas-to-Energy project and the Guyana Power and Light Enhancement Project were delivered via the BBC Echo Vessel moored at Muneshwers Shipping, John Fernandes Ltd. and Guyana Shore Base Inc. terminals. Two transformers weighed 241 metric tons – the heaviest cargo ever to be managed in the country.

The GTE project aims to utilize natural gas from the Liza oil field in the Stabroek Block, managed by ExxonMobil, to satisfy energy needs. An integrated natural gas liquids (NGL) extraction plant and a 300-megawatt combined cycle gas turbine (CCGT) power plant are being constructed at Wales, West Bank Demerara to facilitate this project, being undertaken by an American partnership , LINDSAYCA/CH4.

Guyana Shore Base Incorporated (GYSBI), which participated in the offloading process for the cargo was integrally involved in managing the pipes for the pipeline to bring the gas ashore from the offshore production site. The company has been involved in preparatory works for the project, engaging with both ExxonMobil and LINDSAYCA/CH4 in the process.

Seven transformers to be installed at the GTE project site in Wales were transported to Guyana by Biddle Inc., and offloaded by GYSBI and Sammy Multilift Services Guyana Inc. at GYSBI’s Houston facility. They are being stored at the GYSBI Industrial Estate at McDoom while awaiting transit to the project site.

Nine transformers, including the two 241 metric ton units to be used for the creation of new sub-stations that will support the natural gas liquids plant in Wales, were sourced from Kalpataru Power Transmission Limited and transported to Guyana with the assistance of Boltcargo India. Cranes Guyana Inc., a subsidiary of Muneshwers Limited and John Fernandes Limited (JFL), were awarded the contract for management of the cargo by Boltcargo India.

Muneshwers Limited offloaded six transformers and other miscellaneous cargo while JFL handled the discharge of the remaining three, including the two 241 ton units, which were then transported to JFL’s Inland Terminal by Daco Heavy Lift for storage. Paragon Transport and Lifting Services, Sammy Multilift Services Guyana Inc. and RSD Cargo Transit Inc. transported the other seven transformers and 244 accessories.

The entire process of offloading, transporting and storing the cargo took five days and 3,300 hours of labour, with assistance from Guyana Power and Light, the Guyana Telephone Telegraph Company (GTT) and the Guyana Police Force. It took about 12 hours to transport one of the 241-ton units from Water Street to the JFL storage facility on Mandela Avenue. 96 percent of the 260 staff that conducted and managed the project were Guyanese.

 

 

 

Fulcrum LNG Selected to Develop Gas Infrastructure

Denis Chabrol, 31 July 2024

Houston, Texas – Fulcrum LNG announced that, following the Government of Guyana’s public request for proposals, it has been selected to design, finance, construct, and operate the required gas infrastructure to provide gas monetization solutions and support the acceleration of upstream gas developments.

This key milestone is part of the Government’s stated plan to safely and timely develop its gas resources and create an open-access infrastructure system, providing additional monetization alternatives to upstream developers.

This selection underscores Fulcrum LNG’s commitment to advancing energy infrastructure solutions and represents a critical step in bolstering Guyana’s energy sector. The project will play a pivotal role in transforming Guyana’s natural gas sector, enhancing energy security, and boosting economic growth. Jesus Bronchalo, CEO of Fulcrum LNG, said,

“We are honored to be selected to undertake this strategic energy infrastructure project. This opportunity aligns perfectly with our mission to deliver innovative, reliable, and sustainable energy solutions to develop gas resources. We look forward to working closely with the Government of Guyana and other key stakeholders to ensure the success of this endeavor.”

The main feature of Fulcrum LNG’s solution will involve the development of state-of-the-art gas processing and modular, scalable facilities to produce Liquified Natural Gas (LNG) and NGLs/LPGs for Guyana as well as regional and global markets. Fulcrum LNG partnered with the industry’s leading global firms leveraging advanced technology and industry expertise to deploy the most robust, efficient and sustainable infrastructure solutions.

This undertaking will provide all upstream developers, in Guyana and regionally, with additional optionality beyond their current contractual arrangements by investing in the development of the necessary open-access infrastructure to monetize their gas resources and thus incentivize the development of those resources.

Fulcrum’s proposed infrastructure solutions, in close collaboration with upstream developers, aim to increase the economic viability of current and future upstream gas discoveries, increasing the overall value proposition for the entire basin. Substantial economic benefits, including job creation, significant foreign investment and enhanced energy trade relationships are expected from this venture. In keeping with our project proposal, Fulcrum LNG is considering Guyanese investors in various components of the project. “

Fulcrum LNG’s comprehensive approach to the project will include environmental stewardship, community engagement and adherence to the highest safety standards. The company is committed to ensuring that the development of this strategic infrastructure proceeds in a manner that is both sustainable and aligns with national priorities, delivering tangible benefits to the Guyanese people.

 

 

 

Dash for gas: Exxon link with US firm unlocks potential for fast development

July 3, 2024, by Melisa Čavčić

As the dust settles over the government decision to select U.S.-based Fulcrum LNG, to assist the Stabroek block operator and Guyana in tapping into the natural gas arsenal , pressure is mounting to develop gas resources quickly to lower energy prices and monetize total reserves.

Houston-based ExxonMobil is expected to work beside Fulcrum LNG, McDermott and Baker Hughes to achieve this as the government continues to push the envelope to ensure gas development becomes top priority.

Hydrocarbon potential catapulted Guyana into an exploration hotspot with ExxonMobil spearheading the inroads made in developing the country’s prolific oil resources. Given the series of discoveries that were made and continue to emerge, Rystad Energy’s research in 2022 forecast that government revenue from domestic production would reach $7.5 billion annually in 2030.

With these growth opportunities at the forefront, the government has made it clear that one of its key priorities in the industry is the development of natural gas resources. In line with its strategic objective, the authorities embarked on a mission to develop Guyana’s first gas-to-shore project in August 2020.

This development is anticipated to cut electricity costs by at least 50% while spurring massive economic growth, especially in the industrial and manufacturing sectors. The Natural Resources Ministry left no room for doubt that the government intends to advance development of the infrastructure needed to harness Guyana’s vast resources in the interest of national development and the people.

As a result, the plans to utilize and monetize the total reserves of associated gas were discussed on many occasions with ExxonMobil and partners: Hess Corporation and CNOOC. Since the gas-to-shore project is expected to utilize a relatively modest amount of gas and is perceived to be geared more toward power generation, discussions were guided by the government’s aim to generate additional revenue for the country and create opportunities for the people, through upstream and downstream development of infrastructure in a bid to harness associated gas reserves.

Upon becoming aware that the development of gas resources was not an immediate priority for the Stabroek operator, Guyana’s government turned its efforts to seeking an independent third-party operator to either work with the U.S. giant on the project or complete the activity alone.

To this end, it was decided earlier in the year to advertise locally and internationally through a request for bids (RFB) for the design, finance, construction and operation of gas infrastructure to support upstream developments. Therefore, qualified developers were invited to submit proposals for comprehensive solutions to create gas infrastructure, which includes the necessary pipelines to connect and monetize upstream gas.

ExxonMobil is proceeding with plans for the Gas to Energy (GtE) project in cooperation with the government and start-up is expected by the end of 2024.The proposed project would bring associated gas from the Liza Phase 1 and 2 offshore projects via pipeline to onshore gas processing facilities. The pipeline would transport up to 50 million standard cubic feet per day of natural gas to the facilities.

Second gas project

According to President, Dr Mohamed Irfaan Ali, the government is evaluating the feasibility of a second major gas initiative to complement the ongoing Gas to Energy project at Wales, Essequibo Islands-West Demerara.

“We have identified a technical team to work with the stakeholders in coming up with the model and to negotiate a heads-up agreement and look at the viability, technically and financially, of the project.”

While emphasizing a wave of new economic opportunities from this new project, President Ali outlined several possibilities, including launching an energy corridor to Northern Brazil and Suriname, in line with the regional energy security agenda.

“We have 1.5 billion tonnes of bauxite preserved between Guyana and Suriname. So, depending on the cost structure, this might be an opportunity which makes the aluminium plant viable. All of these options are being examined. We also have the marketing of the byproducts and the use of natural gas in other jurisdictions.”

President Ali claims that the government is hopeful about its ability to secure funding from the United States EXIM Bank, with the $660 million loan expected to be submitted to the EXIM Board on or before the third quarter of 2024. The government pledged that delays in getting the loan will not derail the project.

“Exxon expects completion of the pipeline by the end of the year. The government is also working in a parallel way to have an NGL [natural gas liquids] storage facility and market for the NGL to be advertised shortly.”

Kalpataru Projects International Limited (KPIL), the Indian engineering company contracted to establish transmission lines and substations for the project, anticipates that these elements will also be completed this year.

Moreover, President Ali elaborated that dredging of Guyana’s main channel was necessary to accommodate the ongoing development of the Gas to Energy project, particularly the pipeline installation and the operationalization of a materials offloading facility (MOF).

With this in mind, the government is exploring a viable, long-term plan to dredge the main channel, with $80 billion earmarked in the 2024 budget to advance the gas-to-shore project and its associated infrastructure, including transmission and distribution upgrades to offtake the power.

Taking into account the project’s potential to curb electricity costs in Guyana by half, the Gas to Energy project will see a 200-kilometer pipeline bringing gas from the Liza Destiny and Liza Unity FPSOs onshore. Upon arrival at this West Coast Demerara facility, the pipeline will continue for 25 kilometers to the NGL plant to be constructed in Wales, bringing multiple benefits, including job creation, improved electricity access, foreign investment and energy security.

Bankrolling second gas project is not on Guyana’s current agenda
While reaffirming the confidence in Fulcrum LNG’s capacity to develop untapped gas resources in the wake of speculation regarding the newcomer’s ability to handle the task, Dr. Bharrat Jagdeo is adamant that the government does not intend to participate financially at this stage in the advancement of a second major gas project.

The project is estimated to require billions in investment to set the ball rolling on its development and bring it online. The government intends to use and profit from all the associated gas resources in the Stabroek block to unleash more revenue  and offer new opportunities to its people.

“At this stage, we don’t have any intention to participate financially, as owners. Because that means putting aside large sums of money into the venture, which we don’t have, and secondly, it’s a risky undertaking.”

Considering the determination to proceed with the project regardless of whether ExxonMobil is on board, steps were taken to engage a third-party player to collaborate with the U.S. giant or manage the project independently.

In response to a request for design, financing, construction, and operation of essential gas infrastructure to support upstream developments, 17 companies submitted proposals, including Fulcrum LNG, which was pinpointed as the most responsive and compliant bidder.

As the U.S. firm was selected to support the government and ExxonMobil in utilizing the non-associated gas, the Ministry of Natural Resources engaged in preliminary stage discussions with the company and the U.S. oil major to advance the project.

“The most comprehensive proposal came from Fulcrum and they had some of the top U.S companies as their partners… McDermott, who is the lead contractor as part of this company, Baker Hughes as part of this company. These are some of the top companies in the world, they had clearly the best proposal.”

Using the occasion to hammer home the government intention to advance the project, as the partners are fully interested, he declared that there was no conflict of interest despite rumors about Fulcrum LNG’s CEO, Jesus Bronchalo, since he had severed all ties with ExxonMobil, where he had served as vice president.

“Now, people raise questions of start-ups, this is a new company but when you look at the partners, these are massive companies.”

 

 

 

Eight bidders for offshore 3D Seismic

July 4, 2024

Eight firms submitted bids and are being prequalified to conduct a 3D Seismic survey of offshore oil blocks.

Dr Bharrat Jagdeo told media that once the prequalification process is completed, bidders must submit proposals for the project.

A 3D seismic study is a key tool used in oil and gas exploration to create a three-dimensional image of sub- surface geology. This makes it easier to pinpoint potential locations of hydrocarbon reserves.

Last month, the Ministry of Natural Resources extended a request for Expressions of Interest for a “reputable and experienced” firm to conduct 3D Multi-Client Seismic Surveys offshore.  The object of this assignment is to acquire, process and interpret high-quality 3D seismic data to facilitate the exploration and potential development of hydrocarbon resources offshore and to ensure that this data is available for effective evaluation during future bidding and licensing rounds.

This was not done for the previous licensing round, which concluded in 2023.

“We went out the last auction without any 3D Seismic study, so we didn’t have much data for the areas. When you have less data, people don’t put in great bids, so they don’t know what is there, they can’t interpret the data.”.

This study will be at no cost to the government.

“We are hoping that [for] all of the unallocated areas, we may have the 3D Seismic studies done by these people. They do it, we don’t have to pay for it because it’s a very costly exercise and they can share the data with us and sell it to the clients.”

As a result, the study will be conducted to ensure that block bidders make more informed decisions.

Last year’s auction concluded with 14 oil blocks on offer within shallow and deep-water areas.

During the bidding round, eight blocks were shortlisted based on the bidders’ ability to meet the criteria of the expected work programme and the required financial commitments. Six companies were awarded oil blocks, among them a woman-owned Guyanese company, Sispro Inc., which secured two blocks.

Other blocks were awarded to Total Energies, in collaboration with Qatar Energy International and Petronas, International Group Investment Inc. and Montego Energy, Liberty Petroleum Corporation, Cybele Energy Limited, Stabroek Block consortium: ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited, as well as Delcorp Inc. Guyana, comprising Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.

There is already a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks in the Production Sharing Agreement (PSA). While open to minor adjustments in the PSA, the government has been adamant that the essential fiscal terms would remain unchanged.

Dr Jagdeo said that negotiations are ongoing and agreements on the non-fiscal terms of the PSA are coming to a close.

“We said that we had some pushback on the non-fiscal elements…that they were too harsh, and that is what needs to be finalised,”

 

 

 

 

Eco (Atlantic) Oil & Gas

July 30, 2024 – (WO)

Eco (Atlantic) Oil & Gas Ltd., a petroleum exploration company focused on the offshore Atlantic Margins, has announced its audited results for the year ended March 31, 2024.

Financials.

• The company had cash and cash equivalents of $2.97 million and no debt as at March 31, 2024.
• Following a significant reduction in costs (including G&A, professional fees and operating expenses) as of the time of publication, Eco has a cash position of ca.$1.5 million.
• The company had total assets of $31.3 million, total liabilities of $1.25 million and total equity of $30.0 million as at March 31, 2024.

Post-period end.

• Following the successful farm-out deal of Block 3B/4B, Eco expects to receive a first tranche of $8.3 million during August 2024, subject to customary closing conditions being met.
• The resultant proceeds are expected to give Eco a cash and cash equivalents position of c.$10 million, with no near-term capital commitments for operational expenses.

Operations/South Africa

Block 1 (post-period end).

• In June 2024, Eco announced a farm-In into Block 1 Offshore South Africa Orange basin.
• The company will acquire a 75% Working Interest (“WI”) from Tosaco Energy (Proprietary) Limited (“Tosaco”) and will become operator of a new Exploration Right.

Block 1 has significant 2D and 3D seismic data already completed, and no additional seismic acquisition or drilling of wells is committed in the three-year carried period. Eco intends to complete the interpretation and analysis required for its planned work program with its in-house exploration team.

The farm-in is subject, inter alia, to normal Governmental approvals and no field activity is currently planned that requires environmental permitting.

Block 3B/4B. In March 2024, Eco and its JV partners signed a farm-out transaction with TotalEnergies EP South Africa B.V., who will become operator (“TotalEnergies”) and QatarEnergy International E&P LLC (“QatarEnergy”). Under the agreement, Eco would retain a 13.75% participating interest in Block 3B/4B, offshore the Republic of South Africa.

Post-period end.

• On July 29, 2024, the company announced the signing of an agreement to sell a 1% interest in Block 3B/4B in exchange for cancellation of all of Africa Oil’s shares and warrants in Eco (worth C$ 11.5m).
• Upon completion of the transaction, Eco will hold a fully carried 5.25% interest in Block 3B/4B Offshore South Africa, reducing from the current 6.25%.
• Upon closing, which is expected to occur in August 2024, Total will assume operatorship and will lead the drilling planning and preparations.

Block 2B (post-period end).

• In June 2024, the company relinquished its 50% WI Operated offshore Block 2B, where it drilled its 2022 Gazania-1 well offsetting the AJ-1 oil discovery. The company has completed all necessary documentation, and environmental audits, and has informed the Petroleum Agency of South Africa (“PASA”), the regulator for the Government of South Africa.

Operations/Namibia

• A multi-block farmout process remains underway for all or part of Eco’s four offshore Petroleum Exploration Licences (“PEL”): 97, 98, 99, and 100.
• Eco holds operatorship and an 85% Working Interest in each PEL, representing a combined area of 28,593 km2 in the Walvis basin.

Post-period end.

• Eco added ~1,383km 2D data licensed on PEL100 (Tamar block) to its database, which is being technically evaluated and interpreted by the team to define additional seismic acquisition areas within the block, along with new leads and prospects.

Operations/Guyana

• An active farm-out process continues for the offshore Orinduik Block.
• Eco was encouraged to note the recent news from neighbouring Stabroek Block, where the operator, ExxonMobil, is planning for a seventh development at Hammerhead.

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented, “We made considerable progress across our asset portfolio during the financial year to 31 March 2024. This has been achieved at a time when we have had a strict focus on costs, which has seen the company operate with non-dilutive financings for the last two years, and agree a farm-out on Block 3B/4B, which will significantly increase our cash resources, and leaves tremendous upside potential on the table in the event a discovery is drilled on the block.

“In Namibia and Guyana, we have active farm-out processes underway, and we are very upbeat about the number and calibre of the companies we have had in our data rooms. Both jurisdictions remain at the forefront of global hydrocarbon exploration, and we are confident of delivering a positive update on both in due course. We were also pleased to announce the deal with Africa Oil yesterday, which saw us agree the sale of a 1% interest in the block, in exchange for the cancellation of all of AOI’s shares and warrants in Eco, worth C$11.5 million.

“We are grateful to Africa Oil for their support since 2017, and this agreement will enable us to eliminate a c.16% overhang in Eco’s shares, which are locked up until the transaction closes and the shares and warrants are cancelled. I would also add that the deal was agreed using an $840 million valuation for Block 3B/4B, which values Eco’s 5.25% holding at ca.US$44 million. As ever, we continue to work hard to deliver value for all of our stakeholders and we look forward to providing further market updates in due course.

 

 

 

Local content certificate

July 31, 2024

The Ministry of Natural Resource warned companies within the oil and gas sector that failure to train and hire Guyanese can result in the revocation of their local content certificates.

In accordance with the Local Content Act No. 18 of 2021 (‘Act’) and in keeping with the approved Local Content Master Plans and Local Content Annual Plans, the Local Content Secretariat, wrote to contractors, sub-contractors and licensees, reminding of their obligation to prioritise Guyanese nationals having the relevant qualification and experience for employment and a Guyanese national with the relevant qualification but without the requisite experience shall benefit from necessary training.

Contractors, sub-contractors and licensees are required to ensure that nationals employed to support their operations continuously benefit from training and capacity development.

The Secretariat will conduct audits to ensure compliance with requirements stated in the Act. Contractors, sub-contractors and licensees will be required to submit evidence of, inter alia, providing nationals the opportunity to apply for new and vacant positions, ensuring a level playing of benefits between nationals and non-Guyanese applicants and consideration for overcoming experience gaps for national applicants through training and mentorship.

The Ministry warned that a failure to comply with requirements of the Act would render the contractor, sub-contractor, or licensee non-compliant and therefore hinder the receipt of the Local Content Certificate of Compliance and other related approvals.

 

 

 

CGX Energy Inc. and Frontera Energy Corporation

July 31, 2024

Vice President Dr Bharrat Jagdeo told media that Cabinet is unlikely to extend the exploration license granted to CGX Energy Inc. and Frontera Energy Corporation, joint venture partners in the offshore Corentyne Block.

Despite the company’s hopes for additional time to assess oil prospects, the government remains cautious. Jagdeo was dissatisfied with recent responses provided by CGX to a series of government inquiries.

“Cabinet is not inclined to grant an extension to the license”.

While the company had been given some time to return with further updates, the information provided so far was insufficient.

“We are not inclined to give any extension but [Cabinet] still wants some additional information.”.

The company currently holds no license, relieving the government of immediate pressure to address the issues.

CGX had retained a small portion of the Corentyne Block, having relinquished much of it as per its exploration agreement with the government.

In 2023, CGX discovered oil at its Wei-1 well, located 14 kilometers west of the Kawa-1 discovery within the block. Although oil was found at Kawa-1 in January 2022, CGX and Frontera chose to focus on the Wei-1 well. Further drilling in the Corentyne Block was said to depend on positive results at Wei-1, with the joint venture reportedly having no further obligations beyond this well.

In a recent notice of potential commercial interest submitted to the Guyana Government, the joint venture sought additional time to appraise the Wei-1 discovery and evaluate its viability.