Election uncertainty delaying ExxonMobil’s development locally – CEO
…confirms COVID-19 will slow down drilling operation by a year
…Guyana gets first tranche of 2% royalty on 3 months of oil sales
With Guyana’s electoral process dragging out now for two months without a credible result being announced, the political crisis has led to delays in approvals for the development of ExxonMobil’s Payara project in the Stabroek Block.
This was confirmed by the company’s Chief Executive Officer (CEO) Darren Woods, who on Friday updated investors on its global standings financially and otherwise, as he presented investors with its first-quarter report.
Additionally, Woods reported that the impact of the coronavirus disease (COVID-19) pandemic is presenting a challenge to the company in terms of rotating its crews in Guyana.
He said, “due to the impact of COVID-19 has temporarily slowed our drilling campaign.”
Woods told investors, “…we expect a delay in our future developments [in Guyana] of roughly six to 12 months”.
Guyana Times was told that ExxonMobil has set up its own facility for the workers landing at the Cheddi Jagan International Airport, to be quarantined for the recommended 14 days upon arrival at the airport in a facility that was vetted by the Public Health Ministry.
At the end of the quarantine, the workers—numbering in batches of around 50—will head straight to ExxonMobil’s Floating, Production, Storage and Offloading Vessel (FPSO).
Woods told investors that the situation would, overall, push back the company’s production objective of more than 750,000 barrels per day into 2026.
The company’s CEO lauded the Guyana investments and production from the Stabroek Block as “an integral part of our long-term growth plans and as such is a high priority.”
According to Woods, the production coming from the Stabroek Block along with the Permian in the United States have been key in allowing the company to manage the effects of the price and demand shortfalls which has also been compounded by the pandemic.
He told investors, “our Liza Phase 1 operations have been largely unaffected by the pandemic.”
Production began in December last year on Liza 1 from the FPSO—Liza Destiny—with the first sale of oil being had the following month.
Woods told investors during the first-quarter earnings call that as it relates to Liza 2, the company has managed the impact of the prevailing conditions including COVID-19 and its impact on the project.
As such, he said, the Liza Phase 2 project remains on schedule for a 2022 start-up. That operation will be run using a second FPSO—Liza Unity—currently under construction in Asia.
Speaking directly to the impact of the delayed transition of a new Government locally on the company, Woods lamented that “unfortunately, the ongoing elections process and uncertainty around the next Administration has slowed Government approvals of the Payara Development Plan.”
The Stabroek Block’s Liza 1, 2 and Payara projects are being led by US oil major ExxonMobil in partnership with Hess Guyana Corporation-Nexen and China National Offshore Oil Company (CNOOC).
The company uplifted its first entitlement of one million barrels of crude in January last, marking the commencement of the sale of crude from Guyana for the first time in its history.
The country’s caretaker Finance Minister Winston Jordan meanwhile on Friday also confirmed that the first royalty payments for Guyana’s crude has been deposited into the country’s Natural Resources Fund (NRF).
According to a Government report, “this payment is for the oil produced from Guyana’s Liza Phase 1 Development for January, February and March.”
According to the report, US$4.9 million was deposited into the account held at the Federal Reserve Bank of New York with the next deposit expected to be made at the end of July.
That account is managed by the Bank of Guyana.
It was noted that the US$4.9 million royalty payment is in addition to the US$55 million the country received from the sale of its first entitlement of crude in February to Shell Western Supply and Trading Limited.
According to Jordan, in addition to the two per cent royalty being paid, the country also receives 50 per cent profit oil.
The country is entitled to approximately five million barrels of oil this year as part of its profit share from production at the Liza Phase 1 Development with the country’s first three lifts being sold to Shell Western Supply and Trading Limited.