Govt reaches agreement with ExxonMobil on Payara

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By Jarryl Bryan

After multiple rounds of meetings between oil giant ExxonMobil and Guyanese Government officials, technical staff and regulatory agencies, an agreement on the Payara permit has been reached and is now awaiting Cabinet’s greenlight.

This was revealed in an exclusive interview with Natural Resources Minister Vickram Bharrat, who explained to Inews that Exxon has agreed to, among other things, the inclusion of fines for flaring in the permit.

“It has been accepted by both sides. Of course, it has to pass through Cabinet… it has to be vetted and approved by Cabinet… as the Minister of Natural Resources, I wouldn’t act alone and sign off. Once it passes through Cabinet and the President, Vice President, Prime Minister, are satisfied with it, then I’ll sign,” Bharrat said.

Minster of Natural Resources, Vickram Bharrat

“Over the last two to three days, we had several meetings with Exxon, with EPA (Environmental Protection Agency), Energy Department, GGMC (Guyana Geology and Mines Commission), the Vice President Bharrat Jagdeo, the Attorney General chambers. There were several meetings,” he also explained.

According to Bharrat, Exxon has a deadline in which it has to make a Final Investment Decision (FID) and secure funding. He explained that the Government, therefore, sought to balance a thorough review of the Payara Field Development Plan (FDP) and facilitating Exxon’s FID. In the end, however, the Minister assured that the interest of Guyanese was safeguarded in the process.

“(They agreed to) fines for flaring, treating water to international standards before dumping, local content. Now all these things they agreed to are in the license. So once it’s approved by Cabinet, we’ll be signing it in the new week,” he said, adding that once it is approved, Exxon would be in a position to continue its construction of the Prosperity Floating Production Storage and Offloading (FPSO) vessel.

No compromise

On the sidelines of an earlier event on Saturday, President Dr Irfaan Ali was asked about the progress of the Payara agreement. According to Ali, the agreement has progressed to an advanced stage and there will be no budging by Guyana on fines for certain offences.

“They have made tremendous progress. We are very strong on a few issues. The environmental issues, fines for flaring, the issue of reinjecting water, those are things that we are very strong on. We’re not compromising on,” President Ali had said.

President Dr Irfaan Ali

“And I think they are making steady progress and very shortly we can have a full assessment and announcement. I have sometimes, hourly updates on what is taking place. It is not whether Exxon is receptive. It is our conditions that we are pushing forward on our side,” he had also said.

The Payara project, which Exxon is hoping to start in 2023, is expected to produce 220,000 barrels of oil per day and contain up to 45 wells inclusive of production, water and gas injection wells.

Approval

Approval of the FDP for the project has been delayed by various circumstances. Under the former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government, the Energy Department contracted British firm Bayphase Oil and Gas consultants to conduct a review of the FDP in December of 2019.

The review was completed but in the wake of the controversies that followed the March 2, 2020 elections, little progress was made on approving the plan. ExxonMobil’s Final Investment Decision (FID) has always hinged on gaining approval for the development.

As such, the oil company has complained that further delays in granting approval for the project could result in less revenue for Guyana after the project starts up in 2023. But experts have argued that unless ExxonMobil is able to give proper environmental and local content assurances and even improve the terms of its contract with Guyana, approval should be withheld.

Therefore, the new PPP/C Government had tapped into an existing Canadian grant to recruit independent experts who would review the work done on Exxon’s Payara project FDP, before granting final approval for the project.

Those experts included Allison Redford, a former Attorney General and Premier of Alberta, Canada, who has worked with other groups around the world to conduct similar reviews in nature.

If approved, Payara will be the third FDP from Exxon to gain approval. The first FDP that the Guyana Government approved was for Liza Phase One, while Liza Phase Two is expected to start up in 2022. Thanks to Liza Phase One, Guyana has received well over US$100 million in cargo lift and royalty payments.