Proceeding from the Lisa 1 strike in May 2015, the Exxon/Hess/Nexxen consortium proceeded onto Lisa 2 and in January 2017 hit the jackpot again with Payara, in the Stabroek Block. At the end of March of that year, addressing the inaugural “Oil and Gas Conference and Exposition” at the Marriott was former Premier of Alberta, Alison Redford, who expanded on “Building Trust Through Thoughtful Regulation”.
The gist of her message, culled from her experience in her oil-producing province, was on the importance of communicating with and involving the local community: “Without a clear understanding and everyone working together on what your goals are for this wonderful resource that you have, there will be misunderstanding, miscommunication and perhaps not quite enough trust to make this project as successful as it could be for Guyana.”
Three years later, Ms Redford is back in Guyana, this time as the head of a team of experts that has been sourced through the auspices and funding by the Canadian Government, in the two-week-old President Irfaan Ali Administration. During the elections campaign, the now governing People’s Progressive Party/Civic (PPP/C) had indicated that if they were to be elected, they would review the sector in a “holistic” fashion to ensure that both Guyana and the oil companies benefit in an equitable fashion.
Exxon had signalled that it was ready to proceed with a 220,000-bpd development of the Payara field and was looking to make its Financial Investment Decision (FID) last year for a 2023 start-up of production. However, at the time Director of the Department of Energy, Dr Mark Bynoe indicated that his department had hired Bayphase Ltd as technical consultants that would, inter alia, conduct an in-depth review of the Field Development Plan (FDP) starting in December 2019, and an Environmental Impact Assessment (EIA), which would be presented to President Granger by March 2020. The PNC’s elections’ five-month rigging gambit derailed that timeframe and there was an extension granted to September 2020.
In the week before the long-delayed elections declaration, Neil Chapman, Senior VP of ExxonMobil, made a call to both the then Government and the Opposition PPP for the review to be completed expeditiously and the licence granted. He noted, in common with several commentators, that both Guyana and the operations stood to suffer significant losses if the process was to be delayed beyond September. One expert analyst, Wood Mackenzie said the delays could reduce up to US$2.2 billion of overall project value and Guyana’s share value could decrease by an estimated US$4.5 billion. However, there had been widespread calls from sections of the local community for Guyana to obtain a larger value from the Payara field development, with the already on-stream Lisa 1 and Lisa 2 fields.
In the first week of his assuming office, President Ali announced that his administration had already set into motion the hiring of an expert and he had instructed VP Bharrat Jagdeo to consult with stakeholders on the way forward on the issuance of the licence. VP Jagdeo explained that the Administration would be enacting legislation rather than introducing just a policy.
“It will be mandatory on the company to comply with the legislation. So…we want to get the best technical inputs before we come up with a negotiating brief that will be cleared at the policy level and then we want to engage directly with Exxon [Mobil] to see that this happens,” Jagdeo explained. His position was supported by the local business groups, the Georgetown Chamber of Commerce and Industry (GCCI) and the Guyana Manufacturing and Services Association (GMSA).
The Redford team is already in Guyana and is ready to ensure that the Government’s commitment to complete the review by month end is kept. There are some who insist that the review should take “months or even years”, but they seemingly ignore that the review will in essence simply review the work done by Bayphase over the last eight months.
More pertinently, they ignore that the petroleum industry’s lifespan is decreasing exponentially.
