Every new year in the development of Guyana’s oil and gas sector has arguably been bigger than the one before it. With new project start-ups, increasing oil production, and more revenues to the country, 2023 is tipped to continue this upward trend.
Here’s what to look forward to as the year progresses.
Multi-block exploration drilling
- ExxonMobil has lodged plans with regulators to drill scores of wells across several years. In 2023, the company is expected to conclude a 25-well Stabroek Block exploration campaign and commence another, with up to 35 wells planned, starting in the second quarter. In the Kaieteur and Canje Blocks, the energy major also intends to drill 12 wells each. Initially planned for 2022, these activities were delayed by an Environmental Protection Agency (EPA) request for cumulative impact assessments of all the planned campaigns.
- CGX Energy is set to drill the highly anticipated Wei-1 well in the Corentyne Block in January. With a 56% chance of success at this well, the results are expected to build on CGX’s exploration success at the Kawa-1 well.
- Tullow Oil plans to drill one exploration well in the Orinduik Block. Tullow and its joint venture partners are drawing up plans with focus on the light oil cretaceous targets of the acreage.
Large construction projects
- CGX Energy is expected to complete the development of its Berbice Deepwater Port this year. The company had said that “certain delays” caused it to push back a 2022 completion timeline. It will serve as an offshore supply base for Guyana’s oil industry doubling as a multi-purpose terminal cargo handling base to service agricultural import/export, and containerised and specialised cargo.
- The Gas-to-Energy project, touted the most transformational project in Guyana’s history, was approved by the Environmental Protection Agency (EPA) last year. This means construction can begin on various aspects once companies make their final investment decisions (FID) and the government greenlights payment of a mobilisation fee. Construction could commence on a massive offshore and onshore pipeline system, a materials offloading facility, a natural gas power plant, a natural gas liquids plant, and associated infrastructure.
- Seven firms submitted bids to construct Guyana’s first ever oil refinery. Faced with unexpected expenses due to the global impact of Russia’s war in Ukraine, the government decided to build a refinery to cushion against such impacts. The government intends for work to begin in the first quarter of 2023, with completion in two years.
- Vreed-en-Hoop Shore Base Inc. (VEHSI), a US$300 million project led by Guyanese businessmen, will be operational by the fourth quarter of 2023. VEHSI is a partnership between the 100% Guyanese-owned NRG Holdings and the Belgian Jan De Nul. VEHSI will be a special purpose vehicle for ExxonMobil’s use of a 20-acre shore base at the NRG-owned Vreed-en-Hoop port, primarily to serve the Yellowtail project.
Major oil production ramp-up
- The US$9 billion Payara project is scheduled for first oil in the second half of 2023. It will utilise the Prosperity floating production, storage, and offloading (FPSO) vessel to produce about 220,000 barrels of oil per day (bpd).
- Now at full production, the Liza Phases One and Two projects can produce more steadily throughout the entire year 2023, with expected total volume millions of barrels above their 2022 output. The three projects could have a combined production capacity of more than 580,000 bpd.
Conclusion of first offshore licensing round
- Guyana launched its first offshore licensing round last December, with 14 blocks on offer. With new participants anticipated, licenses could be awarded by May 31, 2023, post negotiations.
- The government will also finalise and publish the model Production Sharing Agreement (PSA), which features new fiscal terms as announced in November last year. February 13 has been earmarked as the date for the release of a draft model contract. This will commence a period of consultation, which will conclude on February 28. The public will see the final document on March 8, 2023.
Modernisation of Guyana’s Petroleum law
- The Petroleum (Exploration and Production) Act, the principal law governing oil operations, is expected to be updated in the Guyana Parliament in the first half of 2023. Vice President Dr. Bharrat Jagdeo said this review would come by March. Government must include an amendment to make sure the configuration of the licensing round is consistent with the law.
More oil production proposals
- ExxonMobil commenced the application process for its fifth Stabroek Block development, the Uaru project, in 2022. The government is in the middle of procurement for a firm to review the field development plan (FDP). The project will add 250,000 bpd to production offshore Guyana, taking total capacity to 1.08 million bpd.
- The Stabroek Block partners are also looking to submit a plan of development for the sixth project in 2023. Hess said it hopes for approval before the end of the year. This adds to their plan to place six FPSOs offshore Guyana, for total output of 1.2 million bpd by 2027.
Preparation of Guyana’s 2020 EITI report
- In keeping with Guyana’s obligations as a signatory to the Extractive Industries Transparency Initiative (EITI), authorities are moving ahead with efforts to prepare a report for the fiscal year 2020. To this end, US$113,700 was set aside from a World Bank loan to hire BDO LLP from the United Kingdom for six months as an independent administrator for the report. The submission of the document to the EITI Secretariat and final publication are expected in 2023.
Guyana’s International Energy Conference and Expo 2023
- The largest event of its kind in Guyana, the International Energy Conference and Expo will be held from February 14-17 2023, at the Marriott Hotel. The theme this year is ‘Harnessing Energy for Development’. To headline the conference, Chief Executive Officer of Hess Corporation, John Hess, is scheduled to deliver the keynote address. Hess is a stakeholder in the prolific Stabroek Block, as well as the Kaieteur Block. ExxonMobil is the event’s lead sponsor.
Second year of spending oil revenues
- This year will be the second time the National Assembly withdraws revenues from the Natural Resource Fund (NRF) for spending on national development priorities. Guyana’s updated Natural Resource Fund Act outlines a clear and simple formula for the calculation of withdrawals allowable from the Fund each year. Based on this formula, using US$1.247 billion expected from oil in 2022, approximately US$998.5 million is projected to be available for withdrawal and spending in the new year. This would represent 80% of the Fund’s expected 2022 inflows.
