By 2027, US$55 billion would have been invested in oil and gas projects in Guyana by ExxonMobil and its co-venturers Hess and CNOOC. This commitment is based on the terms of the 2016 Stabroek Block Production Sharing Agreement.
“Any change to the investment basis, given that we’ve made commitments that will flow 20-30 years, undermines that investment,” President of ExxonMobil Guyana, Alistair Routledge, told reporters at a press conference last week in Georgetown.
The current terms of the agreement include a 75% ceiling on cost recovery, a 2% royalty, and a 50-50 production sharing split. These terms have been criticized by some as providing Guyana with too small a share in comparison to the oil companies.
Routledge noted that changing the terms would raise doubts about whether future investments in Guyana would be viable if the agreed-upon framework could be subject to change. He said this stability is important not just for ExxonMobil and its co-venturers, but for any business considering investing in the country.
“They want to understand there’s stability in the fiscal arrangements and the way that those are going to be executed or managed by the [Guyana Revenue Authority] or any other agency in the country,” he said.
While itself critical of the terms, the Guyana government shares the view that the investment trajectory must be preserved. Vice President Bharrat Jagdeo has said Guyana needs 10 floating production vessels offshore.
The investment basis on which Exxon has been operating has seen the company and its co-venturers sanction a total of six developments so far. Three – Liza 1, Liza 2 and Payara are in production while the remaining three – Yellowtail, Uaru and Whiptail, are under construction. Exxon has since submitted a proposal to authorities for a seventh project – Hammerhead.
WoodMac values 10-FPSO development offshore Guyana at US$150 billion
In addition to Hammerhead, an eighth project – Longtail – is being considered. “They are already moving ahead with Hammerhead, and we have heard talks that Longtail will come after that,” Vickram Bharrat, Guyana’s Minister of Natural Resources, told reporters at a recent press conference.
Just nine years after first discovery Guyana has seven projects in play with three already producing
Norway-based Rystad Energy has said Guyana ranks as the fourth-largest country in Latin America for oil and gas investments this decade, following major players Brazil, Mexico and Argentina.
