Even though discussions between the Energy Department and ExxonMobil on the oil giant’s Payara Field Development Plan (FDP) are yet to reach a conclusion, industry experts are cautioning that the government needs to avoid butchering the plan as it could work against the nation’s interest. Voicing this perspective was Analyst at Americas Market Intelligence, Arthur Deakin.
The industry analyst recalled that there are a few technical issues that are prolonging discussions on the FDP, one of which includes the fact that the Liza and Payara wells are overlapping which could have legal implications. He also alluded to the fact that some civil society actors have called for the government to use this opportunity of granting the approval to its advantage by demanding a better Production Sharing Agreement.
Deakin was keen to note however that while Guyana may be one of Exxon’s most profitable short-term prospects, “the butchering of the Payara FDP could propel them (Exxon) to reevaluate their investments in the country.” The Analyst was keen to note that n 2007, in Qatar, Exxon walked away from a gas-to-liquids plant as it anticipated rising costs for the project. Should the government demand more during negotiations on the Payara FDP, it could also lead to increased development costs for ExxonMobil which at the moment, is suffering millions in losses due to the COVID-19 pandemic.
The analyst said, “Although (Vice President, Dr. Bharrat) Jagdeo has publicly said that Exxon and the government are not seeing eye to eye, internally, he knows that a quick, but studied approval of Payara, will reinforce Exxon’s trust in Guyana. It will also placate the concerns of frightened investors, who are hesitant to enter the country after observing a five-month-long political impasse.”
Deakin added, “The government understands the value of the project and is looking to include it in the Payara contract negotiations.” He warned that any significant regulatory delays, however, could hamper Guyana’s attractiveness and growth.”
THE PAYARA PROJECT
ExxonMobil has identified Payara as the third potential development project within the Stabroek block after Liza Phase One and Two. The Payara discovery was announced in January 2017. The discovery well was drilled in a new reservoir, encountering more than 29 meters of high-quality oil-bearing sandstone reservoirs. It was safely drilled to 5,512 meters in 2,030 meters of water.
The Payara development plan includes a floating production, storage and offloading vessel (FPSO) named Prosperity. It is expected to produce 220,000 barrels per day supporting up to 45 wells, including production, water injection and gas injection wells.