More oil revenues for Guyana this year as Liza-1 production set to increase

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Since 2020, ExxonMobil had planned to make modifications to the Liza Destiny floating production, storage and offloading (FPSO) vessel to safely sustain oil production levels higher than its current nameplate of 120,000 barrels per day. This will soon become a reality, according to Hess Corporation, a 30% stakeholder at Guyana’s Stabroek Block.

“Liza Phase One is producing at its nameplate capacity of 120,000 barrels of oil per day and is currently in a planned turnaround this month, which includes production optimization work designed to increase the vessel’s oil production capacity,” said Chief Executive Officer, John Hess, during the 50th Annual Scotia Howard Weil Energy Conference on Tuesday.

The optimization activity comes at a time when the oil market is facing a major supply shock, given the Russian invasion of Ukraine and the subsequent sanctions which have been imposed by the West.

Guyana is seen as one of the main drivers of supply growth this year, as the Liza Unity FPSO achieved first oil in February.

With both the Destiny and Unity FPSOs now online, it is projected that Guyana will receive over US$900 million in revenue.

An increase in production at the Liza Destiny will further boost the South American country’s total output, thereby increasing its revenue take.

When Hess’ Chief Operations Officer Greg Hill had first announced the debottlenecking plans during a Q4 earnings call in 2020, the intention was to get it done in 2021 during a third quarter shutdown period. That had been curtailed by setbacks involving the gas compression system.

Notably, since the Liza Destiny has total liquids capacity of 158,000 barrels per day and produced water levels have been low, more oil could have been produced beyond nameplate, as was the case on occasions.

Hill had said during Hess’ 2021 Q3 earnings call that a 10-20% capacity for debottlenecking of each vessel is a reasonable expectation.

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