New Guyanese production-sharing agreement expected soon

March 1, 2023
Updated PSA expected to provide framework for upcoming auction of 14 offshore blocks.

Offshore staff

NEW YORK CITY – Contract terms for a new production-sharing agreement (PSA) regulating future oil exploration licenses in Guyana are expected to be finalized by March 8, according to Evercore ISI’s latest Offshore Oracle report.

The new PSA is expected to provide the framework for an expected 2Q 2023 auction of 14 offshore blocks.

Meanwhile, E&P activities offshore Guyana are continuing at a frenetic pace. The Noble Discoverer recently returned to spud the Wei-1 exploration well for CGX Energy, with the sixth-generation semisubmersible also drilling the operator’s first discovery (Kawa-1) in the Corentyne block, and positioned for follow-on work with Tullow Oil for an appraisal well in the Orinduik block.

Separately, ExxonMobil recently commenced a new 10-well exploration and appraisal campaign in the Stabroek block where it has discovered more than 11 billion boe in recoverable resources since 2015 (with eight discoveries in 2022 alone). Central to its plan to boost global oil production 13% by 2027, Exxon plans to make a final investment decision (FID) on its fifth development offshore Guyana later this quarter. The proposed $12.7-billion Uaru project consists of an FPSO and 40-76 development wells.

Operating six drillships in the region, ExxonMobil has four Noble units contracted to November 2025 while two Stena units are contracted through June 2024 but have options extending to year-end. Exxon is producing nearly 400,000 b/d from its first two FPSOs (Liza Destiny, Liza Unity) while the third (Prosperity for the Payara field) is starting later this year.

A fourth FPSO (One Guyana for Yellowtail) is expected to start in 2025, with ExxonMobil targeting an FPSO starting each year through 2027.

Work is underway on the sixth project, Longtail, with a memorandum of understanding signed for the FPSO (Whiptail) and TechnipFMC increasing its estimated project scope to over $1 billion, according to Evercore. ExxonMobil’s partner, Hess Corp., has indicated there could be 10 FPSOs on location over time.