Guyana lagging in preparations for 1st oil – Irfaan Ali

People’s Progressive Party/Civic (PPP/C) Presidential Candidate, Dr Irfaan Ali has given the Government a fail grade for its inability to prepare the country to properly manage the sector, and its preparations for first oil.

Dr Ali made the comment during an interview on the oil and gas sector on Monday evening. According to Dr Ali, confusion abounds as Government has been unable to put in place the necessary safeguards, or articulate a clear vision for the industry.

“Not only are we way behind where we should be for first oil, but there is absolutely no clarity in the vision, no legislative framework, there is no institutional mechanism, there is no structure in which we will manage this sector. There is confusion,” the Presidential Candidate said.

“We have changed the management of oil and gas from different ministries. It’s as if we’re (Guyana) playing hopscotch, just hopping about the place. And we’re not deliberative and we’re not structural in the way we’re approaching management,” he also said, adding that Government has also failed to properly educate the populace on the new sector and what opportunities it brings.

So far, Esso Exploration & Production Guyana Limited (EEPGL) – Exxon’s local subsidiary – has made 14 oil finds in the Stabroek Block over 100 miles offshore Guyana, including four this year.
Last year, the company made five discoveries. These discoveries have pushed the total estimated recoverable barrels of oil equivalent to over six billion. In addition, Exxon is moving ahead with its Liza phase two project, which will contain approximately 30 wells.

The Liza Destiny, Guyana’s first Floating Production Storage and Offloading (FPSO) vessel, arrived in local waters at the end of August. The vessel will play a key role in oil production scheduled to begin in the first quarter of next year.
Meanwhile, Tullow has made at least two oil finds: in its Jethro and Joe wells.

On September 16, 2019, the same day that ExxonMobil announced its 14th oil find, Tullow also revealed that it had made its second oil find in just a matter of weeks: the discovery of 14 metres of oil reservoir at the Joe well.

After the find, Tullow’s Exploration Director, Angus McCoss had noted that the discovery increased the potential of the Orinduik Block. He had also alluded to the Block having multibillion-barrel potential. Since then, however, additional testing had found that Tullow’s crude finds were of a heavy, impure quality that would not be financially viable.

The Orinduik oil block is just a few kilometres from Exxon’s discoveries in the Liza and Payara fields. It is under the administration of Eco Guyana and Tullow, who signed a 10-year Petroleum Prospecting Licence and Production Sharing Agreement with Guyana in 2016. French firm Total E&P Activities Petrolieres entered the fray in 2017, partnering with Eco and getting a 25 per cent share in the block.

Originally scheduled for 2020, the projected start of oil production for Exxon and its partners has been moved up to next month, with Dutch firm SBM Offshore constructing a second FPSO for offshore Guyana.
The only piece of oil-related legislation that has been made official is the Natural Resources Fund Act. Everything else has been in development, with Department of Energy Director, Dr Mark Bynoe explaining recently that they were reviewing the legislative framework for the sector.

Safeguards like the National Oil Spill Plan are a work in progress, with the Civil Defence Commission (CDC) leading the way and engaging relevant stakeholders over a number of months. The third draft of the plan was recently released for perusal.

There is also no policy in place to ensure local content for Guyanese. When the second draft of the local content policy was released, the policy itself admitted that it does not deal with mid and downstream oil and gas initiatives, but rather the direct upstream parts of the sector.

The third local content draft, which is still not approved, has been criticised as favouring foreign firms at the expense of locals.