Even though calls for the renegotiation of the Stabroek Block Production Sharing Agreement (PSA) have reverberated into 2021, Chatham House Associate Fellow, Dr. Valerie Marcel firmly asserts that it is not the only way for Guyana to correct issues related to local content and ring-fencing. The industry expert said there are many opportunities Guyana will have before it to bring oil companies to the table to negotiate favourable concessions or trade-offs. Dr. Marcel said, “…Every time they want to get an approval, every time they want to avoid a penalty, every time they want something, which they always do, each moment is an opportunity to trade and negotiate something you want. But I don’t think renegotiation is that important. It is not the panacea it is presented to be…”
Further to this, the Chatham House Fellow said that Guyana can ensure it captures more value by also paying attention to how projects in the Stabroek Block are designed. In this regard, she said that the Payara Field Development Plan is one area that presented Guyana with opportunities for capturing value. She stressed however that making the best use of these prospects would be dependent on whether the government has all the tools, time, and capacity to be able to ensure fields are developed in the best interest of the state. “So, I know it is not the sexy part of the discussion but it is definitely where the big the value is,” the expert added.
The Payara project is expected to cost a whopping US$9B and will target an estimated resource base of about 600 million oil-equivalent barrels. Ten drill centers are planned along with up to 41 wells, including 20 production and 21 injection wells. The project will also be using the Prosperity FPSO and will be delivered by SBM Offshore with first oil expected by 2024.
Apart from the Payara, ExxonMobil has said it was evaluating additional development opportunities in the giant Stabroek Block, where it made 18 oil discoveries. The development projects being looked at are the Redtail, Yellowtail, Mako, and Uaru. It therefore means that the government will have more opportunities coming up to make use of the advice offered by Dr. Marcel.
