Interview: Exxon set to order 5th Guyana oil vessel, sizing up more blocks

Modec

16/01/2023 15:00

By Sabrina Valle
       HOUSTON, Jan 16 (Reuters) - Exxon Mobil Corp.  XOM.N  is
preparing to approve its fifth oil production project in Guyana
and is considering taking additional exploration acreage, the
head of its Guyanese operations, Alistair Routledge, told
Reuters in an interview.
    The efforts would add significantly to the $30 billion
committed thus far by Exxon and Guyana partners Hess Corp
 HES.N  and CNOOC Ltd  0883.HK . The latest development will
cost about 27% more than the last, a new estimate showed,
reflecting inflation and the larger scope of the project. 
    The consortium aims to pump 1.2 million barrels of oil and
gas per day by 2027 from all the developments, according to
Hess, nearly triple last year's peak output. 
    Guyana has emerged as the world's fastest-growing oil region
since Exxon made its first offshore discovery in 2015. The
consortium has found about 11 billion barrels of oil and gas.
Guyana estimates its fields could hold 25 billion barrels and
aims to produce 1.64 million bpd by the end of the decade.
    Exxon's proposed fifth development, at an oilfield called
Uaru, would pump about 250,000 barrels of oil per day at peak.
It would be the consortium's largest and most expensive project,
outstripping the $10 billion cost of the fourth project.  
    "Maybe more, the market is getting hot," Routledge said,
referring to energy-industry inflation driving up prices for
services and materials. "The team is working hard to keep the
cost down, but it will be hard to keep it below that," he said.
    The development will cost about $12.68 billion, according to
an estimate prepared for Guyana's Environmental Protection
Agency, 27% more than Exxon's fourth development. Its oil would
start flowing in 2027 and continue for 20 years, according to
the Guyana government's estimate. 
    Guyana last week estimated the project would require up to
600 workers at the peak of drilling activity, and employ up to
160 people thereafter. The project will release about 1 million
tons per year of carbon dioxide emissions, it forecast. 
    Exxon has submitted a development plan for the oilfield, and
an initial construction contract was awarded last fall to
Japan's Modec Inc. If the plan is approved by Guyana's
government, the consortium could sanction spending on the
project about April, Routledge said.
    April is when Guyana is due to hold its first competitive
auction for new exploration areas. Exxon will consider bids on
new blocks, the country chief said. 
    "Of course, we will look at it," Routledge said, adding "it
would be premature to say yes or no" to participation before the
country releases the full terms of new production contracts.
    The country disclosed last year a fiscal regime which raises
Guyana's share of oil riches to 27.5%, from 14.5%, through a mix
of royalties and shared production. But it has yet to update the
production sharing agreement for the blocks. Companies are
weighing their own geological data on the areas.
    MORE COMPETITION?
    Exxon and its partners inaugurated Guyana's production in
2019 and today deliver all the oil output in country, from their
6.6-million-acre (26,800 sq km) Stabroek block. 
    Areas on offer could potentially double the offshore acreage
under exploration by the Exxon consortium. Licenses will cost
between $10 million for the 11 blocks in shallow water, and $20
million for the three in ultra-deep-water. The 14 blocks up for
grabs cover about 2,000 sq km each.
    The government wants the auction to reduce its dependence on
Exxon and partners, which have become the lynchpin in a
transformation to industrial from agriculture-based economy.  
    Guyana President Mohamed Irfaan Ali visited India last week
to try to entice private companies and the government to join
its oil business. Joint technical groups will explore bilateral
cooperation, Ali said. 
    "Apart from the auction, we are discussing
government-to-government partnership in a number of areas
including exploration," Ali said.  
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Exxon ramps up oil production in Guyana     https://tmsnrt.rs/3OaUmqZ
Guyana opens bidding process for 14 offshore oil blocks     https://www.reuters.com/article/guyana-oil-auction/update-1-guyana-government-opens-bidding-process-for-14-offshore-oil-blocks-idINL1N32Z0W6
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Sabrina Valle; Editing by Gary McWilliams and
Daniel Wallis)
 ((sabrina.valle@tr.com | Twitter: @sabrinavalle))