Thu | Dec 7, 2023

First audit on Exxon spending in Guyana delayed to year end

Published:Wednesday | November 16, 2022 | 12:06 AM
President of Guyana, Dr Irfaan Ali.
President of Guyana, Dr Irfaan Ali.

President of Guyana Dr Irfaan Ali says that the first audit report on ExxonMobil’s spending in the country will be completed before year end.

The contract to complete the audit was signed in May and it was expected that the reports would be completed by September. However, the completion of the audits has been delayed.

“The delay was because of some coordination issues with the auditors themselves, which is natural in these circumstances,” Ali explained.

In May, three local companies formed a consortium to conduct a cost recovery audit relating to ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited in the Stabroek Block’s Liza Phase 1 oil project. The audit revolves around the US$9 billion estimated spend over three years of activities, from 2018 to 2020.

American oil giant ExxonMobil has made more than 30 discoveries on the block since 2015, and it has ramped up offshore development and production at a pace that far exceeded the industry average.

ExxonMobil’s first two sanctioned offshore Guyana projects, Liza Phase 1 and Liza Phase 2, are now producing above design capacity and achieved an average of nearly 360,000 barrels of oil per day in the third quarter.

A third project, Payara, is expected to start up by the end of 2023, and a fourth, Yellowtail, in 2025. ExxonMobil is also pursuing environmental authorisation for a fifth project called Uaru. By the end of the decade, the oil company projects that Guyana’s oil production capacity would rise above one million barrels a day.

Guyana’s Stabroek Block spans 6.6 million acres (26,800 square kilometres).

ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 per cent interest in the block, while Hess Guyana Exploration Limited holds 30 per cent interest, and CNOOC Petroleum Guyana Limited 25 per cent.

Guyana exploring development agenda

Guyana’s Minister of Finance, Dr Ashni Singh, says the revenues being accrued from the oil and gas sector are still relatively modest considering the country’s developmental needs.

Singh said while the petroleum sector continues to grow and generate economic opportunities, the non-oil sectors must be developed to create a sustainable source of wealth.

“We have seen many examples around the world of countries that were entirely dependent on oil, and if the oil price dips or if the oil production dips for one reason or another, the country finds itself in trouble. We don’t want to be in that situation,” he said in a TV appearance.

The finance minister said the government wants to develop Guyana’s transport infrastructure, including roads, bridges, drainage, and to improve connectivity, particularly in the hinterland.

“Access to our neighbours like Brazil and Suriname is still a challenge. We don’t have a bridge across the river to Suriname, we don’t have an all-weather road to Brazil, and that, of course, you know, some of those infrastructural impediments still weigh very heavily on Guyana’s ability to realise its economic potential,” Singh said.

Guyana currently has an estimated 11 billion barrels of proven oil reserves and is currently producing about 350,000 barrels of oil per day. The authorities expect daily output to climb to a million barrels within a decade.

Singh said the commencement of oil production presents the opportunity to remove the historic impediments to Guyana’s competitiveness and sustainable growth in the long term.

Guyana has been having talks with the Corporacion Andina de Fomento, CAF, a development bank that provides credit and support in the technical and financial structuring of projects in the public and private sectors of Latin America.

On Monday, Guyana said it was open to partnerships with financial institutions such as CAF as it forges ahead with its development agenda.

A CAF delegation led by its executive president, Sergio Díaz-Granados, visited with Singh on Monday.

“Discussions centred on how the financial institution can partner with government to ensure its newly found oil and gas resources are steered toward boosting its economy and diversifying a number of critical sectors such as agriculture, tourism, social services and infrastructure. Government is also pushing its Low Carbon Development Strategy, an area which the bank expressed keen interest in pursuing,” the Guyana government said in a statement.

Singh described the visit of the CAF delegation as historic.