Over 175 International Oil Companies, National Oil Companies and independents are cutting CAPEX and OPEX in tune with low oil prices and have slashed CAPEX guidance for 2020 to around US$122 billion as of May 13. This includes US oil major ExxonMobil which announced in April that it was reducing capital spending by 30 percent and lowering cash operating expenses by 15 percent in response to low commodity prices resulting from oversupply and demand weakness from the COVID-19 pandemic. Despite these cuts, the company said it remained committed to forging ahead with its operations offshore Guyana.
Analysts in the industry have said ExxonMobil’s expertise and financial resources will ensure its operations offshore Guyana – where the break-even is favourable – continue even under the existing dire global conditions.
“Well I think you’ve got two things that are going for you in Guyana; one is that the operator is Exxon and the second is the nature of the assets, especially from a breakeven point of view and development costs point of view, which is that for offshore assets, the Stabroek Block is very competitive in breakeven terms. So, even in a low oil price scenario that asset class is still very attractive,” Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean said in a comment to OilNOW.
Americas Market Intelligence (AMI) experts Dr Remi Piet and Arthur Deakin have also said Guyana will benefit from the support and commitment of the oil major. “They have enough financial resources and trained personnel to weather the storm even as other industry players are battered by low prices and a slow recovery.”
Developing the numerous world-class deepwater discoveries offshore Guyana remains an integral part of ExxonMobil’s long-term growth plans. Current operations onboard the Liza Destiny production vessel remain unaffected, and startup of the second phase of field development remains on target for 2022, with the Liza Unity production vessel currently under construction.
The company is also awaiting government approval to proceed with a third production vessel for the Payara development at the Stabroek block.
Guyana has already received close to US$60 million in profit oil and royalty from production at the Liza Phase 1 Development which got underway last December. The country will lift another 1 million barrels of oil this month.
Production at Liza Phase 1 will hit peak capacity of 120,000 barrels per day by June and ExxonMobil plans to ramp up production to more than 750,000 barrels per day from multiple developments at the Stabroek Block, by 2026.