Canje Block SHOULD the conditions both globally and locally remain favourable, one of the world’s leading energy companies, Hess Corporation, plans to expand its investment in Guyana’s oil and gas sector by injecting US$1 billion next year.
Hess Guyana Exploration Ltd. holds 30 per cent interest in the 6.6 million-acre Stabroek Block offshore Guyana. ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is the operator and holds 45 per cent interest in the block, while CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.
With there being 20 discoveries of high quality hydrocarbon bearing reservoirs at the Stabroek Block so far, stakeholders remain encouraged to continue and even increase their investments in Guyana.
This willingness was recently exuded by Hess Corporation through its Chief Financial Officer, John Reilly, during a discussion in a fireside chat hosted virtually in June by J.P Morgan as part of its 2021 Energy, Power and Renewables Conference.
Reilly, when asked about the company’s development budget, said that Hess has budgeted US$780 million for Guyana this year and is planning to invest around US$1 billion into the country’s oil and gas sector next year.
Though there could be adjustments to the plans as time passes, the company’s strategy remains unchanged mainly because of favourable commodity prices and the developments offshore Guyana.
With the Liza Unity, which has the capacity to produce up to 220,000 barrels of oil per day, set to come on stream next year, the company will be looking to utilise cash inflows to service its loan, and will then divert its attention to increasing dividends.
Also, with the Payara project set for 2024 and Yellowtail, 2025, Reilly said the partners are optimistic about increased revenues. President Irfaan Ali had said already that the Government of Guyana welcomes any investment in the Guyana basin.
“We welcome investment in the Guyana Basin, as well as the multiple opportunities it will spawn within our economy… I want to take just a few moments to say to all potential investors that you need to come; you need to explore, and you need to look holistically at the varied opportunities in Guyana.
“Whether it is large-scale agriculture production, whether it is mining, whether it is forestry, whether it is in the healthcare system, the education system, you need to understand the varied opportunities Guyana offers for different types of investors. It is not only about oil and gas; oil and gas has really brought attention to Guyana, a sleeping giant in investment opportunities,” President Ali said at the opening of the virtual Guyana Basins Summit 2021 (GBS) in March.
President Ali has said already that Guyana is on course to prosperity, with a diverse economy that is yet to reach its peak.
“Our economic prospects have never been brighter; our collective feet are firmly placed on the first rungs of a ladder to prosperity that is clearly within our sight,” President Ali said during his address to the nation on January 1, 2021.
It was reported that with 16 exploration wells planned for this year, Norwegian independent energy research and business intelligence firm, Rystad Energy, has said that 2021 holds “a lot of promise” for Guyana’s burgeoning petroleum sector.
ExxonMobil will be spearheading the local exploration activities, having already set an ambitious divestment target of $15 billion by expelling mature assets in Asia, Europe and Africa, so as to prioritise investments in “high-value” assets such as Stabroek.
According to Rystad Energy, the company’s drilling activity will focus on “firming up” resources in the southeastern part of the Stabroek Block, where deeper plays have been observed underneath the existing discoveries.
ExxonMobil’s first offshore Guyana project, Liza Phase One, began producing in late 2019, well ahead of the industry average for development time. Liza Phase Two remains on track to begin producing oil by early 2022.
Liza Phase Two will produce up to 220,000 barrels of oil per day at peak rates, using the Liza Unity FPSO.
Recently, the oil giant, following an agreement with the Government of Guyana, decided to proceed with the Payara field development offshore Guyana.
Payara is ExxonMobil’s third project in the Stabroek Block, and is expected to produce up to 220,000 barrels of oil per day, after start-up in 2024, using the FPSO vessel. The US$9 billion development will target an estimated resource base of about 600 million oil-equivalent barrels.
“Rystad Energy data suggests that close to 300 million barrels of oil equivalent has been discovered on average for each exploration well (wildcat and appraisal) drilled in the country over the past six years,” Analyst attached to Rystad Energy’s upstream team, Santosh Kumar, said in a recent report.
This aside, with around 16 exploration wells planned, including some in riskier frontier regions, 2021 holds a lot of promise, Kumar said. And, not only is ExxonMobil “firming up” resources in the southeastern part of the Stabroek block, it is also eyeing the unexplored northwestern parts of the block. In addition, work is also lined up for the Canje Block.