GEORGETOWN, Guyana (AP) — A fifth major offshore oil field being developed by an ExxonMobil-led consortium at an estimated cost of $12.7 billion will add an additional 1.3 billion barrels of recoverable oil reserves to the Guyana Basin -Suriname by 10 billion barrels, the Guyanese government announced on Tuesday.
The Uaru-Mako project currently under study could enter production in the next three years, adding up to 63 more wells to the 30 already drilled in the Stabroek block by the consortium, which also includes Hess Corporation and China’s CNOOC.
With two fields in production and two more approved, the consortium is the first of many multinational entities seeking to exploit the huge basin, which promises to turn two small South American nations into some of the largest fossil fuel producers in the world.
Guyana’s Environmental Protection Agency released oilfield specifications for public review on Tuesday, saying Uaru-Mako has at least 1.3 billion barrels of light sweet crude to add to more than 10 billion barrels of recoverable reserves that the consortium has estimated so far.
Current production from the first two fields is nearly 400,000 barrels per day. The agency asked the consortium to take out insurance to cover the costs of any potential oil spills in these fields.
Exxon said that once approved by the local EPA and a final investment decision is made, a fifth giant floating production, storage and offloading (FPSO) vessel will be brought in for fill tankers destined for international markets. The consortium’s licenses cover stretches of the Caribbean about 120 miles (193 kilometers) offshore in an area close to Guyana’s maritime border with Suriname.
The announcement of a fifth major oil field comes amid calls from opposition parties and rights groups for Guyana to get a better deal.
The consortium pays the initial development costs and will recoup 75% when the revenue comes in. ExxonMobil will receive additional revenue equivalent to an additional 12.5% of the cost. Guyana will collect the final 12.5% - about $1.6 billion – plus a 2% royalty on subsequent revenues.
Guyana earned more than $1 billion last year from its share of the consortium’s production-sharing deal, but that’s well below industry standards. The International Monetary Fund, among other outside observers, has urged the government to seek better deals as the oil rush contributes to peak economic growth, boosting Guyana’s GDP by nearly 60% in 2022.
Authorities in Guyana have said they will not push to renegotiate the existing deal, but will demand better terms from any new licensees. Tenders from major global industry players will close in mid-April for 14 new blocks near the consortium’s Stabroek block.