ExxonMobil still holding out for speedy approval of Payara project

Alistair Routledge
Alistair Routledge

On the heels of President Irfaan Ali’s announcement on Tuesday that the Payara project approval will have to wait on an international oil expert’s assessment and advice,  ExxonMobil last night said that delays will reduce the value of the project and that more than a year had already been spent on the process.

In a statement to Stabroek News, ExxonMobil said: “We understand the new government’s desire to satisfy itself the Payara project has been appropriately defined by ExxonMobil and assessed by the relevant regulatory agencies. 

“Over a year has been spent on the approval process for Payara.  The process has been exceptionally rigorous and the Development Plan and Environmental Impact Assessment are in line with or ahead of industry norms.

“We believe everyone understands that delays will reduce the value of the project for the country and no-one wishes to unnecessarily extend the review process.  We will continue to provide clarifications on any aspects of our proposal, as necessary.

“With Liza Phases one and two already approved, ExxonMobil has demonstrated its commitment to a long-term partnership with Guyana to responsibly and safely develop the country’s resources in a mutually beneficial manner.”

In a key oil decision, President Ali on Tuesday evening told Stabroek News that his government is lobbying for technical and financial support to have an international expert review Exxon’s Payara project and advise on the way forward.

Government, Ali disclosed, has approached Canada for assistance in finding a suitably qualified person to fill the spot.

And while ExxonMobil is pressing for a deadline to have its permits approved to make its own Financial Investment Decision on the project by this month, it will have to await the advice of the oil & gas expert. Payara will be Exxon’s third producing well after Liza-1 which is currently in production and Liza-2 which is in the works.

“Specifically to the Payara licence, I have asked the Vice President [Bharrat Jagdeo] and convened a meeting with various stakeholders, and I have made it very clear that we will have a review of what has been done so far. So we are in the process of engaging an international expert to do that review of the work done so far,” Ali said.

“We haven’t identified the person; what we have to do is secure the financing, see where financing is. There is a lot of technical assistance in the sector. We approached the Canadian High Commission, for example, for help in relation to getting someone. So that is where we are,” he outlined.

The Vice President yesterday had to cancel a press meeting and go to be tested for COVID-19 along with the rest of Cabinet, after it was disclosed that Minister of Foreign Affairs Hugh Todd had contracted the virus.

Earlier yesterday, ExxonMobil’s new Country Manager, Alistair Routledge, underscored the company’s long held position on the importance of timely approvals for the project.

Looking ahead, Routledge emphasised the importance of timely approvals for future development projects like Payara.

“Continual development of projects will help further progress local content and provide opportunities and confidence to the local business community, which will lead to additional opportunities for workers and continued capacity building,” a press statement from the company yesterday stated, while not making any direct reference to Ali’s announcement.

Late last month, ExxonMobil announced that it is maintaining its capital expenditure here but wants a quick approval of its third well, Payara, while warning that delays could cost Guyana significantly.

The longer the permits take to be approved, according to company president Neil Chapman, the more this country stands to lose.

Very simple

“It is very simple, everything we and the partners can do to progress Payara on schedule, we are doing and we have done. I have said to our organization many times, we need to be ready to move when the government is ready and we are ready. We are ready to FID (Final Investment Decision) this project but we need an approved development plan and that approved development plan needs to come from the government,” Chapman told his company’s second quarter earning call, two days before Ali was declared President that ended a five-month political impasse.  The ExxonMobil President was at the time responding to the Bank of America’s Doug Leggate on what he was “signalling” in terms of the risk or the potential for delay of the Payara project.

“Of course we are waiting for a resolution like everybody else of the election and I think you are very familiar with what happened down there. There was a vote there was a recount and then there was a series of legal actions… (What) we know is that all parties in Guyana want to progress this development. Of course we are in regular contact with President (David) Granger and the APNU+AFC coalition and we are also in discussion with the PPP and (Bharrat) Jagdeo and Irfaan Ali. What we continue to stress to the government is that if the project gets delayed, it is a loss of value to the country and they understand that.  It is very, very clear. The government understands, the Ministry of Energy understands,” he added.

And along with developmental setbacks, Chapman reasoned, other factors should be taken into the matrix since weather conditions are also critical when planning for offshore works.

Ali maintained on Tuesday that any decisions will have to wait until a thorough assessment of the project is made, and government is convinced that it serves the best interests of the Guyanese people, while still beneficial to the investor.

“We are in government just over a week now and I have asked for a full assessment of all the sectors, not only the oil and gas sector. So we have been receiving documents from all… including work that has been done so far in terms of licence for the Payara project. Having said that, throughout the campaign I had made it very clear that we have to review things,” he said.

The APNU+AFC government was advised by many advocates that since it bungled the renegotiation of the Production Sharing Agreement, it should use the Payara project as leverage, not for an overall renegotiation, but at least for some better fiscal terms.