Exxon increases oil production in Guyana
2023.01.16 11:34
Exxon increases oil production in Guyana
By Kristina Sobol
Budrigannews.com – (NYSE:) Exxon Mobil Corporation in an interview with Reuters, the head of its Guyanese operations, Alistair Routledge, stated that the company is preparing to approve its fifth oil production project in Guyana and is contemplating taking on additional exploration acreage.
The efforts would significantly increase the $30 billion that Exxon and Guyana partners Hess Corp (NYSE:) have already committed. likewise CNOOC (NYSE:) Ltd. A new estimate showed that the latest development will cost about 27% more than the previous one due to inflation and the project’s larger scope.
According to Hess, the consortium intends to pump 1.2 million barrels of oil and gas per day from all developments by 2027, which is nearly triple the peak output from last year.
Since Exxon made its first offshore discovery in 2015, Guyana has become the oil region with the fastest growth rate in the world. About 11 billion barrels of oil and gas have been uncovered by the consortium. Guyana anticipates producing 1.64 million barrels per day by the end of the decade and estimates that its fields could hold 25 billion barrels.
(Graphic: Exxon increases oil production in Guyana. At its peak, the company’s proposed fifth development at the Uaru oilfield would pump approximately 250,000 barrels of oil per day. It would be the largest and most expensive project in the consortium, surpassing the fourth project’s $10 billion price tag.
Routledge said, “Maybe more, the market is getting hot,” referring to the energy industry inflation that is driving up the cost of goods and services. “It will be difficult to keep it below that,” he stated. “The team is working hard to keep the cost down.
An estimate prepared for Guyana’s Environmental Protection Agency indicates that the project will cost approximately $12.68 billion, 27% more than Exxon’s fourth development. The Guyana government estimates that its oil would begin flowing in 2027 and continue for 20 years.
At the height of drilling, Guyana estimated last week that the project would require up to 600 workers and up to 160 workers thereafter. It anticipates that the project will release approximately 1 million tons of carbon dioxide annually.
According to Routledge, if the plan is approved by Guyana’s government, the consortium could sanction spending on the project around April. Exxon has submitted a development plan for the oilfield, and Japan’s Modec Inc. was awarded the initial construction contract last fall.
Guyana’s first competitive auction for new exploration areas is scheduled for April. The country chief stated that bids for new blocks will be considered by Exxon.
Routledge stated, “Of course, we will look into it,” adding that “it would be premature to say yes or no” to participation before the nation releases the full terms of the new production contracts.
The country revealed last year a fiscal arrangement that uses a combination of royalties and shared production to increase Guyana’s share of the oil wealth from 14.5% to 27.5%. However, the production sharing agreement for the blocks has not yet been updated. The areas are being evaluated by businesses using their own geological data.
From their 6.6 million acre (26,800 square kilometers) Stabroek block, Exxon and its partners began producing oil in Guyana in 2019 and currently deliver all of the country’s oil output.
The offered areas could potentially double the Exxon consortium’s current offshore exploration acreage. The 11 blocks in shallow water will cost between $10 and $20 million for licenses, while the three blocks in ultra-deep water will cost $20 million. Each of the 14 blocks up for grabs is about 2,000 square kilometers in size.
The government hopes that the auction will lessen its reliance on Exxon and its partners, who have become the foundation of the transition from an agriculture-based economy to an industrial one.
Last week, Guyana President Mohamed Irfaan Ali went to India to try to get the government and private businesses there to join its oil business. Ali stated that joint technical groups will investigate bilateral cooperation.
“We are discussing government-to-government partnership in a number of areas, including exploration,” Ali stated. “Apart from the auction.”
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