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Clock ticking on Guyana election

South America's most exciting new province has yet to call an election, despite first oil rapidly approaching

When the government of Guyana suffered a no-confidence vote back in December, the expectation was that the election would be called in March, as stipulated by the three-month window in the country's constitution.

But five months on from that deadline, neither the 'caretaker' government nor the Guyana election committee (Gecom) has named a date, and doubts are creeping in whether it will be held at all this year.

The delay has been caused by several factors. First the government appealed the vote to the Caribbean Court of Justice (CCJ), but, after six months of legal wrangling, lost the case. The CCJ said it would not be appropriate to order the interim administration to name an election date but clarified that it was the responsibility of Gecom to respect the constitution.

Now Gecom is in the process of updating its voter list through house-to-house registration that has further delayed the timeline and could take several months to complete—a legal objection failed to cancel the process.

The political stalemate has impeded the development of Guyana's oil and gas sector. "No new decisions nor arrangements can be entered into by the caretaker government," says Robert Persaud, Guyana's former minister of natural resources and the environment. "While first oil cannot be stopped, nor on-going exploration campaigns by current holders of exploratory licenses, the uncertainty will slow new investment decisions."

Fiscal and regulatory change is also at a standstill while the political impasse continues. "There is a glaring absence of a modern regulatory framework to oversee oil and gas production," says Persaud. "The required framework needs new legislation and national consensus approach."

The arrival of first oil is fast approaching. The ExxonMobil-led Liza project, in the Stabroek block, is projected to start-up by the first quarter next year and reach peak capacity of c. 120,000bl/d, produced from the project's Liza Destiny floating production storage and offloading vessel. Phase 2 will begin operations by mid-2022. The $6bn Liza Unity FPSO will add an additional 220,000bl/d to production.

By the end of 2019, ExxonMobil say they will have four drillships stationed offshore Guyana. The Noble Bob Douglas vessel is drilling the first Liza production well. ExxonMobil plans to relocate the Noble Tom Madden and Stena Carron drillships to the Hammerhead-2 and Hammerhead-3 prospects later in the year. The company will then add the Noble Don Taylor vessel in the fourth quarter. ExxonMobil said in its second quarter conference call that it would drill three further exploration wells before the end of the year, with a possibility of a fourth.

The firm's Payara field was originally expected to reach final investment decision later this year, before the scale of the election delay became apparent. The project is awaiting government and regulatory approval but was projected earlier this year to begin production by 2023 and yield 180,000-220,000bl/d.

Scratching the surface

UK-based producer Tullow made its first oil find in the frontier province in August—a lower tertiary discovery at the Jethro prospect, and the first in the Orinduik block. Tullow says that the find supported over 100mn bl oe of recoverable oil resource across 55m of net pay. The Orinduik block contains in total over 2.5bn bl oe of gross unrisked resources according to Tullow.

"Jethro is significant in opening a fourth play in the basin and is also the first substantial discovery outside of the Stabroek license," says Keith Myers, president of research at research consultancy Westwood Global Energy. "It takes Guyana-Suriname on a trajectory towards a 10bn bl basin."

Tullow will next target the Joe prospect in the same block. The company has already contracted the Stena Carron drillship and, at $11mn, the well will cost almost a third of Jethro.Tullow will then commence drilling in September on a cretaceous target at the Capara well in the Kanuku block. Tullow's Guyana portfolio has over 16 tertiary and over 10 cretaceous prospects.

Source: Petroleum Economist
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