September 14 ,2020
ExxonMobil now claims that it has put on hold, the Payara project Floating Production, Storage, and Offloading (FPSO) vessel, called Prosperity. Work had recently started on the construction of the vessel, despite the fact that the Guyana government has not greenlit the project.In its recent press statement announcing the Redtail-1 discovery, Exxon noted, of two vessels in Singapore, that the Liza Unity FPSO, meant for the Liza Phase Two project, is under construction, but that work on the third vessel has been stalled.
The Prosperity FPSO hull. [Photo from SWS]
“Construction activities,” the release said, “are underway in Singapore on the Liza Unity FPSO. A third production vessel for the Payara development, with production capacity of 220,000 barrels a day, is on hold pending government approval.”
Kaieteur News had noted last week, from several credible media reports that the hull for the Prosperity FPSO had already been delivered to SBM Offshore, the Dutch firm Exxon chose to build the FPSO.
It had the hull delivered from Chinese shipbuilder Shanghai Waigaoqiao Shipbuilding (SWS) about two weeks ago. Reports indicated that preparations had already begun for the installation of the mooring system and topside modules for the vessel.
This means that ExxonMobil took the liberty of greenlighting its own ship design without government approval. Hence, if the government now decides that it wants a new safeguard included in the design to protect the environment, Exxon could claim that it would be too inconvenient to turn back. Or if government decides that the FPSO design should have a wider overhaul, Exxon could claim that it would be too costly.
This was exactly the case when issues of grave environmental concern were pointed out by Executive Director of the Environmental Protection Agency (EPA), Dr. Vincent Adams.
The energy scientist had advocated for Exxon’s FPSO design to be properly configured to ensure limited damage to the environment. Worrying flaws had already been allowed in the Liza Phases One and Two permits. The Irfaan Ali administration a few weeks ago took the decision to send Dr. Adams on leave, removing him at a critical time during the review of the Payara project.
According to Exxon’s Senior Vice President Neil Chapman, during the company’s 2020 Q2 Earnings Call, it was given assurances by both major political parties that they accept the urge to approve the Payara Field Development Plan (FDP) as quickly as possible.
It is “very, very clear” that the Government and the Energy Department understands that, Chapman had said. This assurance was given even before the five-month electoral saga came to a close. The election season’s troubles had delayed the approval of the project, which the former APNU+AFC government meant to give early in the year.
Following the delays, Guyana was treated to statements from industry analysts like Rystad Energy about how much value they claim Guyana would lose if it delays approvals any further. Exxon wants to have the approval granted before September is out, Chapman claimed, as this is the time Exxon wants to sign off on its Final Investment Decision (FDP).
Yet, the company had already handed out a contract to Saipem for the construction of a large subsea facility for the FPSO, since last year even before it handed government the FDP, about the same time it contracted SBM to conduct the Front End Engineering and Design (FEED).
As the FPSO is now on hold, government has an opportunity to make key decisions on the mitigation of risks associated with the Payara project. It is also facing increasing calls and arguments for the renegotiation of the overarching Stabroek Block agreement.
The agreement is rife with provisions criticized as illegal and unfair to Guyana, and can be renegotiated once all parties agree to do so in good faith.