The fact that ExxonMobil’s headquarters currently being constructed at Ogle, East Coast Demerara (ECD) is cost recoverable, is justifiable considering the scale of activities being undertaken at the facility.
This was the position of Vice President Bharrat Jagdeo during a recent interview on social media. Jagdeo acknowledged that prior to 2020, he did say that the building should not be cost-recoverable.
But that was in the context of when ExxonMobil was only producing 120,000 barrels of oil per day.
Analyses show that the oil major will be producing 600,000 barrels per day by next year when the facility is completed and over 1 million barrels of oil per day by 2027.
“I did say in Opposition that the headquarters they were building at the time was several times the price of the Marriott. That was exactly what I said. And that for the scale of operation they had, they did not need such a headquarter building. And that headquarter building, if it continued in that form, we will not support it being cost recoverable,” Jagdeo said.
“But what has changed? One, when they started that headquarter when I said we’re producing 120,000 barrels a day. By the time we get to the completion of the headquarters, we’ll be producing 600,000 barrels per day. It has evolved from a headquarter building to house staff. They have 250 staff now, they’re renting. That would evolve to 500 staff, most of which will be Guyanese that will work there.”
Jagdeo pointed out that as such, it was no longer just a headquarters building. Instead, it would feature training facilities, an operations suite and a control centre for all the offshore operations which will be done in the same building. Added to this is the fibre optic cable which will come from the floating production, storage and offloading (FPSO) vessels
“It’s not just a headquarters anymore. To manage a million barrel a day industry, from a safety and operational perspective, you need a building of that nature. A high-end building. Also, with advance capabilities,” the Vice President also said.
“And so that has evolved. And now when you look at the cost of rental, it would approximate almost the cost of amortising the building over time. And that comes from our share of cost recovery too. So, the concept evolved. Had they been building that just for headquarters, we would have maintained our same position.”
Exxon’s local headquarters being constructed at Ogle, ECD, is pegged at US$160 million. During a press conference last week, ExxonMobil country manager Alistair Routledge had admitted that this amount is cost recoverable.
“It’s there solely to support the operations so the cost will be recovered in the cost recovery mechanism. That’s been clear all the way along with the previous Administration and the current Administration as we set up the project,” Routledge said.
Only last year, a US$751,000 cost recovery audit contract to audit US$9 billion in ExxonMobil cost oil expenses was signed and a second report is expected from the Guyanese consortium doing the audit by March of this year.
The oil rich Stabroek Block, which is producing the oil, is 6.6 million acres (26,800 square kilometres). Exxon, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), is the operator and holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
Currently, the Liza phase 1 and phase 2 developments in the Stabroek Block are operating at a combined gross production capacity of more than 360,000 barrels of oil per day (bpd) using the Liza Destiny and Liza Unity floating production, storage and offloading (FPSO) vessels, respectively.
The third development in the Stabroek Block – Payara – is on track to come online by the end of 2023 with a gross production capacity of approximately 220,000 bpd. While this may be the gross production capacity, it is expected that the startup will see a much small number of oil barrels being produced. For instance, when the Liza phase two started in 2022, it was producing significantly less than its current production.
Meanwhile the Yellowtail – the fourth development – is slated for 2025 with a production capacity of some 250,000 bpd. Both these development projects have been approved by the Guyana Government.
Uaru is the fifth development and is expected to come online at the end of 2026 with a gross production capacity of approximately 250,000 bpd with first oil anticipated at the end of 2026. The development plan for Uaru was submitted for Government approval in November 2022 and final approval is expected by the end of the first quarter of this year.
ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027. They are meanwhile seeking project approval for their sixth oil development in Guyana’s waters, approaching the Environmental Protection Agency (EPA) for environmental authorisation for its Whiptail Project.
