Tuesday, November 29, 2022

Oil market hungry for Guyana acreage as global energy security concerns escalate – Westmount Energy Chair

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Faced with the economic effects of the COVID-19 pandemic as well as the Russia-Ukraine war, energy security and affordability have now become key considerations for governments and policymakers. It is on this premise that Gerard Walsh, Chairman of Westmount Energy Limited says the market will be hungry for prime acreage offshore Guyana. This, he said, is irrespective of the fact that significant oil discoveries have been solely confined thus far to the Stabroek Block.

In his recent address to investors, Walsh said the Guyana-Suriname Basin continues to be a global hotspot for exploration activity. He said advantaged barrels in Guyana which result from the unique combination of prospect sizes, reservoir quality, low carbon intensity and low breakeven metrics (US$25/bbl-US$35/bbl) are likely to see exploration drilling maintained for some time to come.

While the initial drilling outcomes from Kaieteur, Canje and Orinduik have not delivered a standalone commercial discovery, Walsh said the drilling results to date provide encouragement on future exploration programmes.

The Chairman reminded that applications for environmental authorisation submitted to Guyanese authorities by ExxonMobil, the operator of the Canje and Kaieteur blocks, augur well for the basin’s future.

ExxonMobil to drill over 60 exploration wells offshore Guyana in six years | OilNOW

Walsh said Westmount’s strategy remains keen on seeking value creation for shareholders via exposure to high-impact drilling outcomes in the prolific basin.

In the meantime, the Guyana government is preparing for the country’s first oil blocks auction. Fourteen blocks will be up for grabs. The maiden event will also see the utilisation of a strengthened model Production Sharing Agreement (PSA). It will include a 50/50 profit split, a 10% royalty and a 65% cost recovery ceiling. The government has also introduced a 10% corporate tax.

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