The World Bank’s board of executive directors has approved a $20 million credit from the International Development Association (IDA) to strengthen institutions, laws, and regulations to promote good governance and prudent management of Guyana’s oil and gas sector.
Announcing the credit last week, the World Bank noted Guyana’s position among the 25 largest oil reserve-holders in the world after a series of discoveries starting in 2015. The annual GDP growth is projected to rise from 4.6 percent in 2019 to 34 percent in 2020, according to the international financial institution.
“Well managed oil revenues can have a transformative and sustainable impact on a country’s development,” said Tahseen Sayed, World Bank Country Director for the Caribbean.
“Guyana today has an extraordinary opportunity to reduce poverty and bring long-term benefits to its people.”
The Guyana Petroleum Resources Governance and Management Project will provide technical assistance to the Government of Guyana in updating existing laws and regulations and introduce strong checks and balances to mitigate environmental and social impacts. In accordance with the World Bank Group announcement at the 2017 One Planet Summit, the project will not finance upstream oil and gas.
“Resource wealth can lift people out of poverty and boost human capital. But a robust policy framework with strong regulations and institutions is an essential prerequisite. Through this technical assistance the World Bank will contribute to strengthening Guyana’s institutions and enhancing its legal and regulatory framework, maximizing the benefits of its natural resources,” said Christopher Sheldon, World Bank Practice Manager, Energy and Extractives Global Practice.
The project will also build the capacity of key institutions including the Department of Energy, the Environmental Protection Agency and the Ministry of Finance for prudent management of the oil revenues. The project will also enhance social accountability through information campaigns and citizen engagement.
Guyana’s oil & gas projects
When it comes to Guyana’s activities in the oil and gas sector, ExxonMobil is a major player in Guyanese waters where it has made numerous oil and gas discoveries in a matter of years.
In addition to its operated Liza development, ExxonMobil is also pursuing exploration efforts offshore Guyana. Last February, after making two discoveries with the Tilapia-1 and Haimara-1 wells, Exxon brought the total number of its discoveries on the Stabroek Block off Guyana to 12.
The gross recoverable resource for the Stabroek Block is now estimated to total more than 5 billion oil-equivalent barrels, including Liza and other successful exploration wells on Payara, Liza deep, Snoek, Turbot, Ranger, Pacora, Longtail, and Hammerhead.
Meanwhile, the Liza Phase 1 is moving full speed ahead, and it is expected to begin producing up to 120,000 barrels of oil per day in early 2020, using the Liza Destiny FPSO. The vessel will be designed to produce up to 120,000 barrels of oil per day. Four drill centers are envisioned with 17 wells in total; eight production wells, six water injection wells, and three gas injection wells.
Liza Phase 2 development plan involves a second FPSO vessel and related subsea equipment, umbilical, risers and flowlines. Approximately 35-40 wells may be drilled at two subsea drill centers which will consist of a combination of producers and injectors to support the production of oil, injection of water, and reinjection of associated gas. The FPSO will have an estimated production capacity of approximately 190,000 to 220,000 barrels of oil per day. This phase is expected to startup by mid-2022.
Right next to ExxonMobil’s Liza development lies the Tullow-operated Orinduik block. Tullow and its partners in the block are currently preparing to spud the first Orinduik exploration well, which is planned for June 2019. The 250 million barrel Jethro-Lobe prospect located on the block will be drilled using the Stena Forth drillship. Tullow has also approved the drilling budget and the location of the second well of its Guyana 2019 drilling program, targeting the Joe prospect. The Stena Forth drillship will move directly after the Jethro Lobe well to Joe and begin drilling this second exploration well in mid-July 2019.
Speaking of Tullow and its activity offshore Guyana, the company is also a partner in the Repsol-operated Kanuku license, which contains the Carapa prospect. This prospect will be tested in the third quarter of 2019 and Repsol has already awarded a drilling contract to Rowan’s EXL II jack-up rig for operations off Guyana. The contract is for one well beginning in the third quarter of 2019 with a duration of approximately 45 days.
In addition to these drilling plans, another well is being prepared for drilling offshore Guyana. Namely, Canada’s CGX Energy has decided to use one of the Rowan-owned jack-up drilling rigs for drilling operations in Guyanese waters. CGX last December entered into a definitive rig agreement with Rowan for the provision of rig services for the drilling of the company’s Utakwaaka-1 well in its Corentyne block.