ExxonMobil Corporation announced formally yesterday its seventh oil discovery offshore Guyana, following drilling at the Pacora-1 exploration well and is projecting production of 500,000 barrels oil per day when all phases are in operation.
In a statement, ExxonMobil said that it encountered approximately 65 feet (20 meters) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 18,363 feet (5,597 meters) depth in 6,781 feet (2,067 meters) of water. Drilling began on Jan. 29, 2018.
“This latest discovery further increases our confidence in developing this key area of the Stabroek Block,” said Steve Greenlee, president of ExxonMobil Exploration Company. He added that “Pacora will be developed in conjunction with the giant Payara field, and along with other phases, will help bring Guyana production to more than 500,000 barrels per day.”
The Pacora-1 well is situated approximately four miles west of the Payara-1 well, and follows previous discoveries on the Stabroek Block at Liza, Payara, Liza Deep, Snoek, Turbot and Ranger.
The discovery had been announced a day earlier by Natural Resources Minister Raphael Trotman.
The latest discovery and the projection of daily production of 500,000 barrels per day at peak will add further fuel to appeals for the 2016 agreement between the government and Exxon’s subsidiary EEPGL to be revisited.
Yesterday, economist Peter Ramsaroop called for the deal to be renegotiated saying it reeked of colonization by ExxonMobil.
In a statement, he pointed out that Guyana under the Production Sharing Agreement has agreed to, after the payment of royalty at 2%, to deduct as much as 75% of the remaining 98% to go toward ‘cost-recovery.’ This includes the company recovering investments made and the daily cost of operations.
Citing a daily production figure of 120,000 barrels of oil for 300 days at US$64 per barrel, he said “This means, ExxonMobil, after paying Guyana its US$154,000 for its 2% per cent royalty on gross production, will now take 75% (US$5,659,500) from the remaining US$7,546,000.
This for cost recovery, leaving US$1,886,500 to divide as profit—the 50/50 sharing agreement seeing daily profits realized at US$943,250 each. What this breaks down to ultimately, of the US$7.7M earned daily from oil production in Guyana at 120,000 bpd at US$64 a barrel, Guyana gives US$5,659,500 to ExxonMobil automatically for cost recovery, together with US$943,250 for its share of profit and the country is left with US1.1M in profits and royalty. Which magician negotiated taking US$1.1M off US$7.7M and giving the partner US$5.6 million after confirming 3.2 billion barrels of oil in the reservoir at the time?”
He argued that while the operations of a Floating Production Storage and Offloading (FPSO) vessel is indeed capital intensive it does not cost US$5.7M per day.
“This amount that ExxonMobil will be collecting daily for cost recovery including the overhead cost of running its operations in Guyana is the largest slice of the proverbial pie”, he stated.
“It means Guyanese have agreed to give ExxonMobil the bulk of its money to do pay for whatever ExxonMobil decides it wants to claim for. The Guyana Government to this date has not demonstrated how it intends to audit and verify ExxonMobil’s financial claims”, he declared.
Ramsaroop, who is an adviser to the Opposition Leader argued that “Guyanese will soon come to the stark realization, the US$330M the country earns in the first five years of oil production will not even make a dent in country’s national economic fortunes. One only needs to look to the recent fortunes in the gold industry and see how the APNU+AFC has translated that US$300M windfall for the economy and ordinary man—the sugar worker, the policeman, soldier, nurse or teacher”.
He said that ExxonMobil contract has to be revised now.
“The projected US$330M is not what Guyanese are expecting. The dreams being sold the nation are much more grandiose. Guyanese will get US$330M a year while ExxonMobil takes home US$2 billion…This cannot be right. This is beyond the exploitation of the Guyanese nation; this is the effective colonization of Guyana once again”, he stated.