We saw the evidence with our own eyes: bottles of crude from the second Floating Production, Storage and Offloading (FPSO) vessel Liza Unity as production started last week. It was from Liza Phase 2 of the massive Stabroek Block and was the same light, sweet crude as from the Liza 1. This means it will command the same premium Brent Light Price which is presently at US$94/barrel and heading upwards to US$100/barrel and beyond.
This is not just because of the present jitters in the market over the war noises emanating from the Russia-NATO standoff in the Ukraine or fluctuating US reserves. It arises from structural conditions in the industry due to the massive and precipitate strategic cutbacks in drilling new wells or exploring for new fields because of commitments to switch to renewables, combined with increasing demand as the world shows signs of slowly heading out of the COVID-19 pandemic.
The Liza Unity is soon expected to reach its target of 220,000 barrels per day (bpd) and at that point, will bring our production to over 340,000 bpd since the Liza Destiny from Phase 1 is exceeding its projected production of 120,000 bpd. The Prosperity FPSO vessel, which will kick off production from the third project, Payara, in the Stabroek Block, is presently under construction in Singapore and is also expected to produce around 220,000 barrels of oil per day by next year to take our production beyond half-a-million bpd. The bid for evaluating the field development plan for the fourth project in the Stabroek Block, Yellowtail, has just been accepted.
And when that is completed along with the necessary EPA approval, production is expected to start before the end of 2025. The same Dutch firm SBM that constructed the other FPSOs has already been contracted to build the new one in Singapore. The company said this FPSO will also be designed to produce 250,000 bpd of oil, store 2 million barrels, and have associated gas treatment capacity of 450 million cubic feet per day with water injection capacity of 300,000 barrels per day. The FPSO will be moored in water depth of about 1800 metres. What all of this means, is by then Guyana will be producing 800,000 bpd and approach Venezuela’s present output. At maximum, Exxon’s and its consortium of Hess and CNOOC have projected reaching 10 FPSOs before the end of the decade to exploit the more than 10 billion barrels of oil in the Stabroek Block. By then, our production should be around 3 Mbpd not counting production from other blocks by other operators and place us in the top ten oil-producing nations in the world, ahead of Kuwait.
Against this background, even though it is advised that we not “count our chickens before they are hatched”, our income from this resource would obviously be rising proportionately. As such, it is very heartening that the People’s Progressive Party/Civic (PPP/C) Government had not only signalled in its 2020 Elections Manifesto that it will focus initially on building infrastructure and fund Private-Public Partnerships (PPPs) in a gas-to-shore project, but has already catered for the initial initiatives in this year’s budget. It has already passed Local Content legislation for locals to garner the maximum amount of income from the upstream processes along with a plethora of training programmes for them to be brought to the skill levels of foreigners.
Even before production started in 2019, we had been made aware of the dreaded “Dutch Disease” that is contracted when other sectors of the economy than oil and gas are neglected and gradually become atrophied. Also heartening, therefore, has been the Government’s commitment and concrete actions to diversify our agricultural base that was the raison d’être of our foundation as a colony. The Intermediate Savannahs are once again being opened up, this time to produce soya and corn for stock feeds to buttress our meat production.
Guyanese will gain employment and not depend on handouts.
