As it continues preparations for the oil and gas sector here, government says it has myriad plans, which include the independent United Kingdom-based think tank Chatham House coming to conduct an analysis on if an oil refinery would be beneficial here.
“We continue by the day to prepare for the eventuality of oil production,” Minister of Natural Resources Raphael Trotman said on Friday.
He also informed that government was currently developing and is in final stage of a process of having about seven pieces of legislation ready. Among them are the complete overhaul of the Petroleum Act, the Regulations for the Petroleum Act, legislation for the establishment of a new petroleum commission, which will be a regulatory agency, and also legislation for local content, for health and safety, the environment and the use of revenues made from the sector, such as the establishment of a sovereign wealth fund. “On a daily basis things are happening,” Trotman asserted.
It is to this end that he pointed out that government plans to hold a two-day seminar, under the auspices of Chatham House, which would deal with overall oil and gas development here.
The organization’s expertise and services have also been sought in analyzing the pros and cons of an oil refinery, although the minister noted that already government has taken note of what happened to Suriname, which has one. “Our demands are by all standards low. We have to forecast where our economy will be and that will inform… a pronouncement on if we will or will not have [a refinery],” he said.
Guyana is also observing the recent developments with regard to a court action in the Central African country of Chad, which has seen Exxon Mobil ordered by a court to pay some US$74 billion in fines and US$819 million in royalties. The Chad government had filed the litigation stating that a consortium led by the US oil giant did not meet its tax and royalty obligations.
“We saw with interest and it just reminded us that we need to be vigilant,” Trotman said.
However the minister said he did not believe the ruling will interfere with the company’s operations here.
Nineteen onshore support base applications
And with government proposing to construct an onshore base and associated infrastructure in association with the private sector to support to serve the fledging offshore oil and gas sector, the minister announced that his ministry has received 19 applications. Of that amount, half are from local companies while the other nine are from firms in Dubai, Asia, the United States and the United Kingdom, among others.
“Later this month we are meeting international companies which will be coming to present to government their proposals for the establishment for an onshore oil and gas facility…We would like to give both the local and foreign companies the right to make presentations. Government is looking to enter into a private-public partnership where government has an equity in whatever onshore facility is established and we then ensure that Guyanese can benefit,” Trotman said.
The companies will begin making their presentations to government sometime later this month and that process will continue into November.
The Ministry of Natural Resources has noted that the ideal onshore base location would allow for access by ocean going vessels and favourable ocean conditions; good transportation links with easy road access to Georgetown, its facilities, amenities and the international airports at Timehri and Ogle; short commuting time to urban centres for workers; short sailing transit times to offshore fields; flat topography to minimise construction costs; large vacant areas to allow future unrestricted expansion; and availability of power, water, waste disposal and ICT Infrastructure.
Giving a background on the venture, the ministry noted that Guyana’s potential rests on the discovery of Exxon’s Liza-1 and Liza-2 wells, located approximately 120 miles offshore in 5,500 feet of water in the Stabroek Block.
It said the remote location and deep water will likely mean that the selected development will consist of subsea wells connected to a Floating Production Storage and Offtake vessel and shuttle tankers, which make for complex logistics.
It added that production is anticipated in or before 2020, with all of the production facilities being fabricated overseas, installed and supported by large foreign based contractors and vessels. However, as the development progresses into the operational phase, it said, it is anticipated the operators will require the local economy to provide an increasing percentage of these services. It is this demand, coupled with the desire of the government to expand and diversify their economy and provide much needed employment, which is driving the administration to pursue the development of an onshore base and associated infrastructure.