Delays in sanctioning the ExxonMobil-led Payara project offshore Guyana could result in a gap of more than $1.5 billion of revenues for the project partners and the country if startup lags the original 2023 target date by a year, energy consultancy Rystad Energy said July 15.
Guyana's government could generate around $4.4 billion in oil production revenues by 2028 from Payara, one of 16 ExxonMobil discoveries on the country's deepwater Stabroek block, if the original startup date of 2023 for that project were kept intact, Rystad said.
But revenues diminish "quite substantially" if the project is delayed, the consultancy said. A six-month delay means the project would generate around $3.6 billion in revenues, leaving a gap of $800 million, and drops to about $2.8 billion in revenue — for a gap of $1.6 billion — with a 12-month delay.
Earlier in 2020, ExxonMobil announced cutbacks in global spending due to low oil prices and crude demand destruction owing to the coronavirus pandemic and added this could delay startup of Payara by six to 12 months.
"The delays have already removed more than 50 million barrels of production [from Payara] that could have been achieved by 2030 if the project had been sanctioned in 2019," Rystad said in a statement.
"The development partners involved in the project are hoping to receive approval later this year, but in our updated base case scenario we assume [Payara project] will not be sanctioned until the first half of 2021 and will achieve first oil by 2024," it said.
The project would be the third Stabroek development for the partners, which include Hess Corp and China's CNOOC. The first discovery, Liza, began producing in December 2019.
"Despite recent delays, the Payara development is still in a position to produce more than half of its reserves by 2030 if it is able to commence production by 2024," Palzor Shenga, Rystad Energy's senior upstream research analyst, said. "Any further delay could cost the stakeholders — the project partners and Guyana — dearly."
Oil systems tested maximum capacity in Q2
During the second quarter, Liza Phase 1 oil systems were "successfully tested to the full capacity" of 120,000 gross b/d, ExxonMobil spokesman Todd Spitler said.
A second phase of Liza field production is in development and would produce 220,000 b/d at its peak, and is expected to come onstream in mid-2022.
Logistical issues as a result of the pandemic and low oil prices have slowed the world's upstream sector. And in Guyana, international observers of the country's March 2 election agreed the initial vote count was not credible. In addition, a recount in June showed a victory for the opposition.
On July 15, US Secretary of State Mike Pompeo said the country would impose visa restrictions on "individuals who have been responsible for, or complicit in, undermining democracy in Guyana," adding that immediate family members of such persons may also be subject to restrictions.
"This action ... is to send a clear message of the consequences of subverting democracy and the rule of law," Pompeo said.
However, ExxonMobil and Hess have said in recent months they will continue with further development of Stabroek, including Liza Phase 2 and also drilling and exploration.
The partners had earlier set a goal of expecting more than 750,000 b/d of oil output from the block by 2025, which by then would include five floating, production, storage and offloading vessels. But it is not known how delays at the Payara-Pacora development will affect that target, and ExxonMobil declined to speculate.
Application submitted for Kaieteur oil, gas activities
But Guyana operations continue, ExxonMobil's Spitler said. In June, the partners submitted a block-wide application for environmental authorization to conduct oil and natural gas activities on the Kaieteur Block, Spitler said. Kaieteur is located north of Stabroek.
Also, "we will prioritize drilling operations to deliver on Liza Phases 1 and 2 project objectives while also enabling continued exploration and appraisal work to deliver long-term value," Spitler said. "We are also prioritizing key exploration opportunities along with appraisal wells to further understand the resource base in our three offshore blocks (Stabroek, Canje and Kaieteur)."
Spitler acknowledged that travel restrictions have impacted the partners' ability to move workers into Guyana and will affect their ability to maintain normal operations offshore.
The partners have set up a coronavirus prevention screening process in local facilities to allow for further monitoring and separation of rotators coming into Guyana.
Spitler also said ExxonMobil specifically has worked with successive governments throughout the time it has operated in Guyana, and reaffirmed its stance of non-partisanship and non-interference in Guyana's political process.
