Installation activities for start-up of third oil project underway

ExxonMobil, through its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has commenced installation works in anticipation of the start-up of production activities later this year at the thirddeepwateroilprojectin theStabroekBlock,Payara.

According to a notice published in Thursday's edition of the Kaieteur News b y t h e M a r i t i m e Administration Department (MARAD), the operator recommenced installation activities in the Payara Field of Guyana Exclusive Economic Zone on March 7, 2023.

The exercise is scheduled toconcludeonNovember30, 2023 and will incorporate the useofthevessel'PLVSaipem Constellation'.Marinershave been advised to stay clear of the vessel and navigate with extreme caution when in the area.

The area is situated nautical miles or 189 4 kilometers off the coast of Guyanaandcoversanareaof 136.8 square nautical miles or469.3squarekilometres.

In November 2019 Saipem announced the contract award of the Payara subsea development project by EEPGL, subject to final investment decision (FID), for the detailed Engineering, Procurement, Construction and Installation (EPCI) of a large subsea production facility

The Payara discovery is located 200 kilometres offshore Guyana in 1,800 metres water depth. Ten drill centres are planned along withupto41wells,including 20 production and 21 injectionwells.

The project will utilise onshore infrastructure which includes shore bases, warehouses,storageandpipe yards, fabrication facilities, fuel supply facilities, and waste management facilities inGuyana.

On February 19, the Floating Production Storage and Offloading (FPSO) Vessel that will develop the resources in that field left the Keppel Shipyard, Singapore forGuyana.

The vessel, Prosperity, wasbuiltbySBMOffshore,a D u t c h s h i p b u i l d e r headquartered in the Netherlands.

Prosperity is expected to arrive in Guyana onApril 18, 2023. It is the largest vessel constructed so far and will b o o s t G u y a n a ' s o i l production by some 220,000 barrels of oil per day ProductionatthePayarafield wasinitiallysettocommence in2024.

While the FPSO is designed to produce 220,000 barrels of oil per day, it also features an associated gas treatment capacity of 400 millioncubicfeetperdayand a water injection capacity of 250,000 barrels per day It will be spread moored in a water depth of about 1,900 meters and will be able to storearound2millionbarrels ofcrudeoil.

The Saipem Constellation vessel that will be conducting the installation activities in the Payara field (Photo credit: Saipem)

Currently there are two FPSOs operating offshore Guyana at the Liza One and LizaTwodeepwaterprojects. They produce approximately 360,000barrelsofoilperday

Even as production is poised to increase, the revenue from this source is hardly likely to significantly enlarge as well, due to the lopsided 2016 Production Sharing Agreement (PSA)

ExxonMobil.

Activists in Guyana have been lobbying for changes to be made to the 2016 PSA as Guyana receives a mere two percent royalty for its sweet light crude and settled for 50 percent profit sharing, after Exxontakes75percentofthe earningstoclearitsexpenses.

The deal that the oil companyoftenbragsaboutto its shareholders, also forces Guyanese to pay their share of taxes, amounting to millions of US dollars each year This figure is likely to further balloon as more operationscomeonstream.

In addition, the country is allowing ExxonMobil to operate offshore without full liabilitycoverageintheevent of an oil spill, which means that the risk is borne by Guyana.

Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expensesinanother