Rystad Energy Report Highlights Economic Impact of Payara-Pacora Development Delays
July 30th, 2020 – Georgetown, Guyana – According to a recent report published by Norway-based intelligence and research institution Rystad Energy, delays to the development of the Payara-Pacora project offshore Guyana are impacting value and output forecasts.
Delays in project approvals are caused by applications placed on hold whilst the situation with Guyana elections continues.
The delays specified by Rystad Energy concern the ExxonMobil Payara development project, the oil company’s third planned development project within the Stabroek block, following successes in Liza 1 and 2. Announced in January 2017, the Payara discovery well encountered more than 29 meters (95 ft.) of high-quality oil-bearing sandstone reservoirs. Payara is a new reservoir some distance from the Liza reservoirs, and development plans include a floating production, storage and offloading vessel (FPSO) expected to produce 220,000 barrels per day from 45 supporting wells.
Originally planned for approval in 2019 with first oil in 2023, the delays in the approval process have pushed back first oil to 2024, assuming approval is granted in the first half of 2021. The delays to the project start have a number of economic consequences for Guyana, principally that fewer barrels of crude oil will have been produced than originally forecast, with a knock-on effect on forecast revenues.
A 12-month delay to the project approval reduces forecast total revenues for 2028 by $1.6 billion, reducing the net present value (NPV) of the project. The impact is more than just on the revenue side; ExxonMobil and their project partners continue to incur operating costs during the approval delay. The resulting effect for Guyana and Guyanese people is a reduction in inbound revenue, a reduction in the number of available jobs both offshore and onshore, and a reduction in the economic opportunities that would otherwise be available due to oil revenues.
‘The best thing for Guyana is to move forward at pace with these developments, in parallel with aggressive investment in our people and our nation’s capacity to develop its own resource’, said TOTALTEC CEO Lars Mangal. He continues, ‘In the article, Rystad refers to the delayed production as ‘lost’, which is the case in the economic evaluation by an oil company. This notion of ‘lost’ aligns with Guyana not benefiting from the accelerated revenue stream and available work. However, the production of the oil is actually ‘deferred’ for Guyana - it’s still in the ground.’
Rystad Energy’s forecast models based on the impact of probable delay durations can be found below:
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