ExxonMobil will have an initial 20-year period to produce petroleum under the license granted by Guyana for the Liza Phase 1 development project, with a single renewal period of up to 10 years thereafter.
As part of the agreement, ExxonMobil, its development partners, contractors and sub-contractors are required to provide a plan for the employment and training of Guyanese citizens in the pre and production phases of the project.
OilNOW understands a preliminary local content plan outlining workforce assessments, requirements and development, for ExxonMobil and some of its contractors, has already been provided to Guyana’s Ministry of Natural Resources.
In accordance with Guyana’s Petroleum (Exploration and Production) Act No.3 of 1986, under guidelines for Production Sharing, the contractor shall be allowed to share the profit oil with Government of Guyana on a basis no less than 50% per field. The contractor can enjoy a maximum or a ceiling of 75% of recoverable costs per month.
In the case of ExxonMobil and its development partners, Hess and Nexen Petroleum, the maximum 75% cost recovery will only obtain until the initial investment cost is cleared. After this period, Guyana can expect to receive more revenue from its share of profit oil. The country will also receive a 2% royalty on gross earnings.
Guyana announced in June that it had approved the ExxonMobil Liza Phase 1 development plan and issued a Production License to the US super-major. The company soon after announced its Final Investment Decision, stating that Phase 1 is expected to cost just over $4.4 billion. This includes a lease capitalization cost of approximately $1.2 billion for the Floating Production Storage Offloading vessel (FPSO) facility, and will develop approximately 450 million barrels of oil.