Energy Dept head says steps being taken to verify Exxon’s oil production

Director of the Energy Department Dr Mark Bynoe
Director of the Energy Department Dr Mark Bynoe

Even as the details of the crude lifting agreement between Guyana and ExxonMobil is being finalised, the Department of Energy intends to push for a third-party representing Guyana’s interest to be on board to verify how much crude oil Exxon extracts.

This is according to Department of Energy Head Dr Mark Bynoe, who hosted a press conference recently and explained that verification is an important part of the whole crude lifting process.

“So in the event there is any issue when the fuel is shipped, whether quality or quantity wide, we will be able to have our own evidence to push back against that,” Bynoe further explained at his press conference.

According to Bynoe, many of the mechanisms to carry out the crude lift are covered under the crude lifting agreement. This includes the facilities, technology and how the samples will be stored aboard the FPSO.

Guyana’s profit-sharing arrangement with ExxonMobil is for 50 per cent of profit oil. But with Exxon reclaiming its investment costs as cost oil, it means Guyana will initially get 12.5 per cent of profit.

Originally scheduled for 2020, first oil production has been moved up to next month. It is understood that the initial crude lifts will be 1 million barrels. With the first lift going to Exxon, Guyana is not expected to get its share until February to March.

According to Bynoe, the Energy Department is also gearing up to sign two agreements which will directly impact how much money Guyana really gets from the oil sector. One is an agreement to have a firm audit Exxon’s cost oil claims, which is known to be around US$460 million.

Crude lift agreement

When it comes to the system governing the crude lifting, which simply means the oil is loaded onto the vessel for transport, Bynoe had provided some key information. For one, the crude lifting agreement is near completion. He also laid down timelines for first oil and lifting of the crude.

“The Department has signed a contract with a crude marketing specialist, and a commercial specialist, who will be assisting the Department’s preparations for first oil. The Department is working to conclude a similar contract with a petroleum accounting specialist and a contract administrating specialist.”

“The crude lifting agreement is being finalised and has advanced significantly. The CLA is expected to be completed in the new week and Government will be a signatory as a lifter of crude, along with the Stabroek co-venturers.”

According to Bynoe, their agreement will be based on the Association of International Petroleum Negotiators crude lifting agreement. He explained that it will be customised to reflect the reality of Guyana’s sector.