Oil majors may be slashing spending and deferring development plans across the globe, but they remain committed to developing the newest offshore oil finds in the heart of Latin America.
This from OilPrice.com:
Long-Term Potential in Offshore Oil Projects
These operators continue to view the oil discoveries offshore Guyana and Suriname as high-quality resources that deserve the full attention and financing even as oil prices are sitting below $30 a barrel. Abundant quality offshore resources could pump oil for decades, compared to a year or two of the wells in the U.S. shale patch, which are much cheaper and faster to design, drill, and develop, but which deplete much quicker than large offshore reservoirs.
For this reason, it shouldn't come as a surprise that Exxon said at the earnings call last week that it would be cutting production in the Permian, yet going full-steam ahead with the developments in Guyana.
ExxonMobil excludes offshore Guyana projects from capex cuts
"Guyana remains an integral part of our long-term growth plans and as such is a high priority," Exxon's chairman and chief executive officer Darren Woods said on the call.
Operations at Liza Phase 1 have been largely unaffected by the COVID-19 pandemic, Exxon said. Thanks to the Liza Phase 1 development, Guyana officially joined the ranks of oil-producing nations at the end of December. Exxon and its partner, Hess Corporation, now believe that the recoverable resource base from 16 oil discoveries offshore Guyana is more than 8 billion oil-equivalent barrels.
Liza Phase 1 continues to ramp up production, which is expected to reach full capacity of 120,000 bpd in June 2020, Exxon said last week. In addition, Liza Phase 2 development is carrying on as planned and remains on schedule for start-up in 2022. Exxon is also working with the Guyana government on the approval of the field development plan (FDP) for another discovery, Paraya, the U.S. supermajor said.
"Unfortunately, the ongoing election process and uncertainty around the next administration has slowed government approvals of the Payara development plan," Exxon's Woods said on the earnings call last week.
"The review of the Payara FDP is fairly advanced," but talks continue, Mark Bynoe, Director of Guyana's Department of Energy, said this week.
The government of Guyana has also just deposited the first royalty payment for Guyana's crude, worth the equivalent of US$4.9 million, into the country's Natural Resources Fund (NRF), with the next deposit expected to be made at end-July.
Guyana's crude is also attracting the largest commodity trading houses and oil majors willing to market the oil to which the government is entitled. As many as 34 firms--including Shell, which lifted Guyana's first oil cargoes; Exxon; and even Aramco Trading--expressed interest in April to market Guyana's share of the oil from the Exxon-operated Liza development, Stabroek News reported last month.
See the full story here: The Only Hotspot Where Big Oil Will Still Spend
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