Vice President of Guyana, Dr. Bharrat Jagdeo, on Thursday discussed the challenge the country faces in attracting oil investments, as it contends with 85 other nations vying for similar opportunities via bid rounds. He made the comments in response to a journalist’s question about the fiscal terms of ExxonMobil’s Stabroek Block Production Sharing Agreement (PSA). The thrust of his argument is that Guyana has to remain competitive.
“We have to look out for our own here in this country,” he said. “Suriname and the others are having a hard time already, getting to a stage where there’s a commitment to even invest… Guyana still remains attractive.”
He noted that energy transition demands are posing challenges for countries. He has argued that companies are finding it harder to attract investments into fossil fuel projects.
Jagdeo argued there is a limited timeframe available for oil exploration and production before external pressures make it even harder to attract investment. The government is currently fighting a case in court related to the provision of financial assurance by Exxon in the case of a spill. It said the outcome of the case has the potential to kill the momentum of the country’s oil development, and its wider economy. The case could see Exxon being required to provide a guarantee that is ‘unlimited’. From all indications, this is not standard industry practice.
He believes government should manage the attractiveness of the sector to ensure it preserves Exxon’s plans to add more floating production vessels offshore, and to preserve interest in the ongoing licensing round. But despite the need to remain attractive, he said that does not mean Guyana will compromise proper regulation of the sector.
“Increasing momentum doesn’t mean we have to be lax on other things. Our environmental permits now are substantially stronger than they were five years ago,” he explained. “Our capacity to fight spills now is vastly enhanced because of what we have just agreed [on], that capping stack. That would plug [a spill] immediately, and would allow drift and all of this not to take place.”
ExxonMobil expects to ramp up production offshore Guyana in excess of 1.2 million barrels of oil per day (bpd) by 2027, and potentially closer to 2 million bpd by the end of the decade.
