The Ministry of Natural Resources (MNR) yesterday announced the approval of the Uaru Field Development Plan (FDP) and the issuance of the Uaru Petroleum Production Licence to ExxonMobil’s subsidiary here, EEPGL.
This follows swiftly on the heels of Esso Exploration and Production Guyana Limited (EEPGL) receiving a permit on Thursday for Uaru from the Environmental Protection Agency (EPA). That very day, ExxonMobil announced that the final investment decision had been made in favour of proceeding with the development of Uaru. Observers say the rapidity of the decision making underlines the determination of both ExxonMobil and the Guyana Government to go full speed ahead with oil extraction notwithstanding the poor deal that Guyanese have been stuck with and climate change risks.
In its release yesterday, MNR said that the ministry, with support from the petroleum division within the Guyana Geology and Mines Commission (GGMC), worked alongside ExxonMobil Guyana (EM) from May to November 2022. As part of this, technical and financial scenarios for developing the Snoek, Mako and Uaru reservoirs were presented. “The pre-submission engagements amongst MNR, GGMC and EM were not a pre-approval mechanism but served to optimize alignment with legislative frameworks and international best practices. The November 1, 2022 submission of the production license application and accompanying Field Development Plan underwent a rigorous review process by MNR and GGMC staff, supported by an independent consultant procured through the World Bank. The FDP review process took over four months while the overall process took over 11 months”, MNR said.
The release said that the Uaru development benefits from EM’s “Design one, build many” philosophy, which allows for more efficient project implementation by leveraging similarities between black oil projects. The project is expected to produce 812 MBO (Million Barrels of Oil) in the initial twenty-year licence period through a total of 44 wells – 21 producers and 23 water and gas injectors. The floating, production, storage and offloading (FPSO) vessel, Errea Wittu, which will be built by Japanese FPSO-building and operating company, MODEC, will produce 250 kbd at peak production. First oil is anticipated for the second quarter of 2027, boosting Guyana’s overall production rate to over 1,100,000 barrels of oil per day”.
Additionally, the release said that MODEC will now compete with SBM Offshore, the Dutch-based company responsible for the first four projects in the Stabroek Block. Notable changes in the FPSO design compared to previous projects include using a combined-cycle gas turbine for power production and a closed-loop flare system, reducing greenhouse gas emissions from the project.
Certain conditions that are applicable to the Yellowtail project were excluded from the Uaru production licence since they were deemed to have been sufficiently addressed by the Yellowtail licence conditions. Similar to the Payara licence, the Uaru PPL boasts a Unit Development component, covering four of the Uaru field reservoirs that extend into the Liza production area. The reservoirs are not being tapped into by Liza developments and are instead covered by the Uaru licence.
The release noted that the Uaru project is budgeted to cost US$12.683 billion and it is subject to cost recovery under the Stabroek Block Petroleum Sharing Agreement. The Cost Reporting condition was strengthened to include annual synergy reporting, acknowledging the shared facilities and personnel between these projects that result in cost savings. Additionally, a Capping Stack condition was included in this licence to ensure compliance with the commitment to have the Capping Stack in-country as required by the Yellowtail licence, the release added.
