ExxonMobil, Hess Corporation, and CNOOC.NEXEN, have already racked up US$3.5B in expenses for the Liza Phase One Project. Liza Phase Two is expected to be within the US$6B range. For the remaining wells, the consortium has noted that gross capital cost can be as much as US$50 billion, bringing the total to approximately US$60 billion to be recovered. Taking this enormous sum into consideration, Canada-based engineer, Darshanand Khusial, says it is imperative that the Government ensures it is involved in monitoring these costs as it is 40 times the 2020 budget.
In his most recent letter to the press, Khusial who is a member of the Oil and Gas Governance Network (OGGN), said that unlike the budget, it is not clear that Guyana knows upfront what it is receiving for that money expended by Exxon and its partners and what are the alternatives at its disposal. The engineer said, “The Liza Phase One gross capital costs were initially estimated at US$4.4 billion then it was reduced to US$3.7 billion and finally to US$3.5 billion.” He added, “That is an approximate saving of a billion dollar, about 2/3rds of the 2020 Guyana budget. But there was no detailed breakdown of the types of savings.” And, more concerning Khusial said, is the fact that there is no indication that these types of savings can be applied to reduce the cost on the US$6 billion Liza Phase Two project.
Taking this into account, the transparency advocate said that the government needs to ask itself a few key questions. Some of these include: How involved it is in the deciding and monitoring of capital costs associated with the oil projects? Does it have a detailed breakdown of the upfront costs for the projects? Does it have a voice in the selection of the contractors to build the billion-dollar FPSOs? And has it hired experts to question the oil companies’ selection of various suppliers?
The transparency advocate noted that the people of Guyana will be paying off US$60 billion for years to come. As such, the government he articulated should treat the seriousness of this costs the same it does with the budget.