Payara production license superior to APNU/AFC approved Liza 1, 2 – Jagdeo

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…as PPP secures vastly improved terms

With the Opposition – A Partnership for National Unity/Alliance For Change (APNU/AFC) criticising the recently signed Payara license, Government has had cause to do side by side comparisons of the license APNU/AFC approved when they were in Government.

According to Vice President Bharrat Jagdeo, a comparison with the Payara license and the license for Liza Field 1 and 2 will show that the People’s Progressive Party (PPP) were able to secure far improved terms compared to the Opposition.

Vice President Bharrat Jagdeo

One significant improvement highlighted by Jagdeo was the layers of reporting ExxonMobil must do, something that the Government has enshrined in the Payara license. The license mandates that ExxonMobil supply daily production statements to the relevant Minister with respect to the Stabroek Block. The statements must include disaggregated figures for gas and petroleum production.

“You will see the massive improvements and how we have moved to protect our patrimony, not necessarily from the discal perspective, because that is subject to another agreement, but definitely in terms of making sure we can adequately manage this area, through information flow to make sure we’re getting our fair share of the deal,” Jagdeo explained.

“Secondly, to see that the development offshore is done in an orderly fashion. Thirdly, that we do it in an environmentally safe manner. Fourthly, that liabilities are not accrued to the State. That should be those of the oil companies. And insurance. Strengthening those provisions.”

Another major difference is the prohibition of routine flaring, which has negative effects on the environment. Jagdeo noted that while some have contended that Exxon has wiggle room to flare gas during its startup, in reality, that wiggle room is no more than 60 days.

In addition, another provision in the Payara agreement is the requirement for Exxon to submit its development and operating cost estimates for the Payara field within 90 days from the date the license is issued.

In addition, Exxon has to submit a breakdown of the actual operating costs for the first year of the Liza Phase 1 field, which began producing oil last year. This must be done within 180 days of the Payara license being issued. According to Jagdeo, such clear requirements for Exxon to submit its costs were lacking in the Liza production license.

The Payara license also speaks to produced water, which is a byproduct of oil and gas production. Produced water, which contains a number of toxic impurities, is brought up out of the oil well during crude production.

Meanwhile, Jagdeo further explained that the license includes provisions for safety and compliance audits paid for by Exxon, which will evaluate Exxon’s management of waste. He noted that the inclusion of this in the license is a new feature.