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Guyana’s stop-start election makes headway

Latin America’s fledgling hydrocarbons province sets election date as first oil looms

The Guyana government has finally set an election date after months of political backbiting and court case appeals failed to reverse a vote of no-confidence in President David Granger’s administration.

The government announced to parliament that the election is now scheduled for 2 March, despite the original National Assembly vote back in December 2018, supposedly triggering a poll within a three-month window. The latest delay was abetted by a decision from the country’s Elections Commission that Guyana would not be ready to hold a vote until late February.

“The Granger government has used diverse legal strategies to delay the election, aiming to have first oil before the polls open in order to profit politically,” says Christian Wagner, a Latin America analyst at risk consultancy Verisk Maplecroft.

Clarity on the proposed date is still far from clear. The government declared the date before the National Assembly had voted on whether to extend the life of the transition government, as set out in the country’s constitution. But the government says the election will take place in March irrespective of any attempt from the opposition People’s Progressive Party (PPP) to block the extension. 

“President Granger has promised a date for the election, but both he and the Guyana Elections Commission have failed to make it official,” says Raul Gallegos, director at consultancy Control Risks. “The opposition will likely refuse to extend the government’s tenure, or call for a vote in the National Assembly.”

Oil is a central issue in the impending poll. At the start of September, the opposition PPP leader Bharrat Jagdeo said all contracts signed after ExxonMobil’s 1999 production sharing agreement (PSA) would be reviewed if the party wins the pending election. “The PPP’s comments questioning the terms and conditions agreed to with ExxonMobil are a red flag,” says Gallegos. But he questioned the likelihood of either party overturning any established contracts. 

The PPP has also outlined plans for a higher government take from future contract negotiations. “This position has been very politically profitable for the PPP and is key to their electoral chances,” says Wagner.

Reap the rewards

But while Guyana is dogged by political uncertainty, the upstream sector continues to enjoy tangible successes. In September, both ExxonMobil and Anglo-Irish producer Tullow announced major discoveries. ExxonMobil (with a 45pc stake and operatorship), along with partners US independent Hess (30pc) and China’s Cnooc (25pc), announced a 14th addition to its roster of Stabroek block discoveries—encountering 108ft (33m) of high-quality oil-bearing sandstone reservoir at the Tripletail-1 well in the Turbot region, and taking the block’s aggregate recoverable resources to more than 6bn bl oe.

ExxonMobil next plans to drill the Uaru-1 well, 6 miles from the Liza field, which is currently in development. Liza Phase 1 is expected to begin production in early 2020, flowing an estimated 120,000bl/d. Phase 2 of the project received government approval in May and will start-up in mid-2022—a second floating production storage and offloading facility, the Liza Unity, will help add another 220,000bl/d.

“The Granger government has used diverse legal strategies to delay the election” — Wagner, Verisk Maplecroft

A third stage at the Payara oil discovery is planned for 2023, dependent on timely government approval, and will boost production a further 220,000bl/d. By the end of 2019, ExxonMobil says it will have four drill ships operating in the region.

Following the Jethro find in the Orinduik block in August, Tullow (with a 45pc stake and operatorship), along with partners Total (25pc) and Canada’s Eco Atlantic (15pc), flagged a further discovery at the Joe prospect, west of Jethro. An estimated 14mn bl oe of net pay oil was encountered in an Upper Tertiary play, with Tullow adding that thinner sands above and below the main discovery will now be assessed for potentially increased reserve estimates.

Tullow (with a 37.5pc stake and operatorship), along with partners Spain’s Repsol (37.5pc) and Total (25pc), will next turn its attention to the Kanuku block for 2019’s final drilling target. It will begin drilling a $20mn well at the Carapa prospect in October. Tullow has two further drilling targets offshore Guyana in 2020, and one in 2021.

The firm is also targeting neighbouring Surinamese waters in the second half of 2020. Tullow has identified the Goliathberg-Voltzbergen North prospect in Block 47 as another drilling target in the region—as well as potential prospects in Block 62 and Block 54.

Source: Petroleum Economist
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