ExxonMobil to pay US$400,000 for annual audits as Guyana tightens oil oversight

…Govt releases Hammerhead Petroleum Production Licence

ExxonMobil Guyana, the licence holder for the Hammerhead development offshore Guyana, will be required to pay US$400,000 annually into a Government-controlled account for the preparation and conduct of audits, according to details released in the project’s production licence.

On Monday, ExxonMobil made a final investment decision for the Hammerhead development after receiving the required regulatory approvals. Hammerhead, the seventh project on the Stabroek block, is anticipated to come online in 2029. According to the company, the development will utilise a floating production storage and offloading (FPSO) vessel with a capacity to produce approximately 150,000 barrels of oil per day (bpd). The US$6.8 billion Hammerhead project will include 18 production and injection wells.
As a result, the Government has mandated specific stipulations in the Hammerhead Petroleum Production Licence that covers auditing, occupation, health and safety, use of technology, and assessments, among others.
The stipulation regarding auditing, which will remain in effect for three consecutive years, mandates that the oil company transfer the funds within 30 days of the licence’s issuance and on the same date annually thereafter. The money is earmarked for the Ministry of Natural Resources to develop audit scopes, procure third-party auditors, and build institutional capacity for monitoring drilling, production, waste management, and compliance.
“The Licence Holder shall pay to an account held and controlled by the Government the sum of four hundred thousand United States Dollars (US$400,000.00) to be used by the Government for the preparation of the audit scope and the procurement of third-party auditors to supplement the Minister’s resources and develop institutional capacity for the ongoing conduct of audits as provided under this paragraph. The Licence Holder shall verify such account and the Minister agrees to cooperate, assist and provide the Licence Holder any information the Licence Holder requires to conduct such verification,” the Hammerhead Petroleum Production Licence specified.
In addition to the financial contribution, ExxonMobil Guyana must maintain adequate insurance throughout the term of the licence, in accordance with Guyana’s Petroleum Act and the governing Petroleum Agreement. The company is also obligated to submit insurance documentation to the Minister no later than 90 days before project start-up, with further documentation to be provided upon request.

Tightening oversight framework
Meanwhile, in a move seen as a tightening of Guyana’s petroleum oversight framework, ExxonMobil must also procure an unaffiliated, independent third-party consultant to carry out a comprehensive reserves and resources assessment of Hammerhead three years after production begins.
The company will be required to submit quarterly resource and reserve reports to the Minister in a prescribed format, covering all potentially saleable products, including oil, gas, and natural gas liquids. These reports must comply with international standards set by the Petroleum Resources Management System (PRMS); cooperate fully with Government audits of reserves, providing access to petroleum data in its possession to the Minister or authorised agencies; and review and report on development planning activities no less than twice annually to ensure continued alignment with regulatory requirements.
The Hammerhead development is located in the south-western portion of the Stabroek Block offshore Guyana and targets the Hammerhead reservoir, which was discovered in 2018.
According to the Ministry, the US$6.8 billion project will be produced through a Very Large Crude Carrier (VLCC) conversion-type FPSO, which will be built by MODEC, a Japanese FPSO-building and operating company. Production will be facilitated through 10 production wells and 8 injection wells. First oil is anticipated by 2029, boosting Guyana’s overall production capacity at approximately 1,500,000 bpd, with the FDP projecting this by Q2. Additionally, the associated gas produced from the Hammerhead Project reservoir will be transferred to the GtE pipeline network.