The Liza Unity floating production storage and offloading (FPSO) vessel, which is poised to reach nameplate capacity of around 220,000 barrels of oil per day this year, is set to almost triple Guyana’s oil revenue and is already strengthening the financial standing of Stabroek Block co-venturers ExxonMobil, Hess and CNOOC.
In fact, Hess Corporation’s Chief Executive Officer (CEO), John Hess recently revealed that the company has been able to clear off the remaining US$500M of its US$1B term loan and increase regular dividend by 50 percent.
The fortune for Hess is only poised to get better this year as at capacity, Liza Unity will generate approximately US$1B of net operating cash flow annually to the company at US$60 per barrel Brent.
“Looking forward, as our free cash flow generation steadily increases, we commit to return 75 percent of our free cash flow to shareholders through further growth in our regular dividend and acceleration of share repurchases,” the CEO stated during his participation at the 50th Annual Scotia Howard Weil Energy Conference which was held virtually this week.
The CEO also reminded of Guyana’s importance to Hess’ growth portfolio as he alluded that the advantaged barrels of the Stabroek Block projects are key to helping the company survive any energy transition scenario outlined by the International Energy Agency (IEA).
Hess said, “We recognize that climate change is one of the greatest scientific challenges of the 21st Century and we support the ambition to achieve net zero emissions by 2050. Our Board of Directors is climate change literate and actively engaged in overseeing Hess’ sustainability practices.”
He added, “And our strategy in reporting is aligned with recommendations of the Taskforce on Climate related Financial Disclosures or TCFD.”
In 2020, Hess noted that his company significantly surpassed its five-year targets for Scope 1 and 2 greenhouse gas emissions intensity as well as flaring intensity by 46 percent and 59 percent respectively versus 2014. He said the company’s new five-year targets for 2025 are to reduce operated Scope 1 and 2 greenhouse gas emissions intensity by 50 percent and methane emissions intensity by 50 percent versus 2017.
The CEO said too that the company has also committed to achieve zero routine flaring on its operated assets by the end of 2025. In addition to this, OilNOW understands that Hess is investing in technological and scientific advancements designed to capture and store carbon emissions including ground-breaking work being conducted by the Saach Institute.
For Guyana, officials estimate the country will receive close to US$1 billion this year in oil revenue as production at the Liza Phase 2 Development ramps up.
“It is estimated that deposits into the [Natural Resource Fund] NRF for 2022 will total US$957.6 million, comprising some US$857.1 million earned from the government lifts of profit oil, and an additional US$100.5 million from royalties,” finance minister, Dr. Ashni Singh has said.
The projection is a ramp-up from revenues received from the production of oil in the years prior. Since production began in December 2019, and up to the end of 2021, the Fund received US$607.6 million. That’s US$185.4 million from government’s share of profit oil and US$12.9 million from royalties in 2020; and in 2021, US$357.2 million from Government’s share of profit oil, and US$52 million from royalties.