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Thursday, February 25, 2021

Guyana accounts for US$15 billion in deepwater sanctioning since 2019

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Global consultancy group Wood Mackenzie says it expects another year of around US$300 billion in upstream development spend, down 30% on pre-crisis levels and 60% below 2014’s US$750 billion peak. Deepwater spend has been underpinned by US$50 billion in new projects approved in 2019 and 2020, including ExxonMobil’s Liza Phase 2 and Payara Developments at the Stabroek block offshore Guyana.

When it comes to the question of what is the ‘right’ level of global spend, WoodMac said that equation must be solved for the dynamics of demand, unit costs and timing.

“But global spend at 2021 levels is clearly insufficient to satisfy medium-term demand, even in our accelerated energy transition 2-degree scenario,” the consultancy group said.

A number of quality projects are on hold as cash is being conserved. This underinvestment will last until balance sheets are strengthened, energy transition strategies solidified and there is confidence in post-crisis demand growth, WoodMac pointed out.

“We anticipate around 20 major project sanctions in 2021, up from just over 10 in 2020 but just half the prevailing pre-crisis trend,” the consultancy group stated.

“Deepwater spend is underpinned by US$50 billion of new projects approved in 2019 and 2020, mostly in US Gulf of Mexico, Brazil and Guyana. For many, 2021 will be a peak spend year. Another eight projects (US$30 billion of investment) are ready to be approved in 2021 – Bacalhau, Mero and Whale are the biggest,” WoodMac said.

The Liza Phase 2 Development, sanctioned in 2019, has been ranked as being among the top 15 approved offshore projects in the world for that year in terms of capital expenditure and facility type. The US$6 billion project, which will utilise the Liza Unity FPSO being built by SBM Offshore, will be targeting 600 million barrels of oil when it gets underway in 2022.

Additionally, ExxonMobil sanctioned its third project offshore the South American country in 2020. Payara – a US$9 billion development targeted for start-up in 2024, will also focus on an estimated resource base of about 600 million oil-equivalent barrels. The Prosperity FPSO is being built by SBM Offshore for this project.

Together, Liza Phase 2 and Payara represent a total of US$15 billion in project sanctioning in Guyana for the 2019-2020 period.

To date, ExxonMobil has made 18 discoveries offshore the country, amounting to around 9 billion barrels of oil equivalent resources.

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