ExxonMobil briefing on Oil & Gas Development

Dear Editor,

It was reported in the news media on February 2, that Natural Resources Minister Raphael Trotman had arranged for Jeff Simons, country manager for ExxonMobil development of its oil and gas sectors to address Ministers, Heads of Departments and others regarding production preparation and the methodology which will be deployed to produce oil by 2020 from the recently discovered Liza field, off Guyana’s northern coast.

It appears that the oil will be pumped and temporarily stored in containers anchored on the ocean bed, before it is loaded onto tankers for world markets/refineries. The gas produced will be separated from the oil and apparently flared and/or returned under pressure into the oil bearing sands/rocks to increase flows. Therefore, no crude oil will be pumped to onshore facilities for storage and/or be refined for local consumption and export, nor will the natural gas be liquefied for export or generation for electricity to feed the national grid, having regard to the fact that its marginal cost of production is nearly zero. Hence, Guyana will just be a producer of natural resources (oil & gas) with no refinement of the primary products and hence few job opportunities being created for Guyanese, as has been the case with sugar and bauxite production, with no value added components installed locally by them to generate jobs.

The APNU/AFC Government should not delude itself and conclude that it has the capability, know-how, nor financial resources necessary to build the infrastructure necessary to get the crude oil onshore and refine it into its various components for export. This also applies to get the natural gas produced to onshore facilities for power generation and liquefy it for export. Therefore, it should negotiate with interested investors and the oil partners who will be extracting the crude oil/gas to build these facilities in Guyana by offering attractive incentives, such as land and lavish tax breaks.

Lastly, the Government should start developing the means and methods which should be used to measure and account for the oil being loaded onto vessels for export. Expertise and guidance to do so should be sought from the Norwegian and British governments (North Sea oil), as well as from Petrobras, which has been extracting oil from its Atlantic Ocean basins for export to world markets. If not properly accounted for, a lot of the crude oil pumped from the Liza wells could easily disappear through collusion by corrupt employees, thus depriving the country and its people from the expected financial windfall produced from oil that they so badly need.

Yours truly,

Charles Sohan