As disruptions in the global oil and gas industry intensify as a result of oil price shocks and the COVID-19 pandemic, companies have been forced to slow down or stop operations altogether. While the co-venturers at Guyana’s Stabroek Block – ExxonMobil, Hess and CNOOC – have each announced cutbacks in their company’s expenditures, there has been no indication that the price slump in particular, poses an immediate threat to production operations in the South American country.
“You’ve got two things that are going for you in Guyana,” Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean, told OilNOW. “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. 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.”
Parker said Rystad Energy does not anticipate current market conditions will result in oil production in Guyana coming to a halt, provided there are available export tankers and buyers in what is now an over-supplied market.
ExxonMobil announced on Tuesday that it is reducing its 2020 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. Hess recently announced a $800 million reduction from its previous budget of $3.0 billion and CNOOC plans to trim 2020 investments by up to 15%.
None of the companies have indicated that oil production in Guyana will be affected by these measures.
Exxon in its announcement to cut capital spending said developing the numerous world-class deepwater discoveries offshore Guyana remains an integral part of its long-term growth plans. “Current operations onboard the Liza Destiny production vessel are 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 had said.
If a slowdown in oil production becomes necessary, it is likely to be as a result of measures that are being put in place for the COVID-19 pandemic which has resulted in travel restrictions that affects the movement of personnel to the country.
“Efforts are being made to limit the disruption of the coronavirus to our operations but given the global nature of our operations, travel restrictions have impacted our ability to move workers into Guyana and could impact our ability to maintain normal operations offshore,” Janelle Persaud, ExxonMobil Guyana Public and Government Affairs Advisor had told OilNOW.
For now, oil production continues unaffected at the Liza Phase 1 Development and plans are already underway for phase 2 of the project which is already approved. Exxon is also awaiting government approval for its third development at Payara and is looking to proceed with a fourth, at Hammerhead. The company anticipates that by 2025 it could be producing more than 750,000 barrels of oil per day at Stabroek.