(AP) — A fifth major offshore oil field being developed by a consortium led by ExxonMobil at an estimated cost of $12.7 billion will add another 1.3 billion barrels of recoverable oil reserves to the 10-billion barrel Guyana-Suriname basin, the Guyanese government said Tuesday.
The Uaru-Mako project currently under review could come on stream in the next three years, adding add as many as 63 more wells to the 30 already drilled in the Stabroek Block by the consortium, which also includes Hess Corporation and China’s CNOOC.
With two fields in production and two more approved, the consortium is the first among many multinational entities seeking to exploit the massive basin, which promises to transform two small South American nations into some of the world’s largest fossil-fuel producers.
Guyana’s Environmental Protection Agency released the oil field’s specifications on Tuesday for public review, saying that Uaru-Mako has at least 1.3 billion barrels of sweet, light crude to add to the more than 10 billion barrels in recoverable reserves the consortium has estimated so far.
Current production from the first two fields is nearly 400,000 barrels per day. The agency required the consortium to take out insurance to cover the costs of any potential oil spills in those fields.
Exxon has said that once it’s approved by the local EPA and a final investment decision is made, a fifth giant floating production storage and offloading vessel (FPSO) will be brought in to fill tankers for international markets. The consortium’s licenses cover stretches of the Caribbean located about 120 miles (193 kilometers) offshore in an area near Guyana’s maritime border with Suriname.
The announcement about a fifth major oil field comes amid calls from opposition parties and rights groups for Guyana to get a better deal.
The consortium is paying the up-front development costs, and will recover 75% when revenues roll in. ExxonMobil will receive additional revenues equivalent to another 12.5% of the cost. Guyana will collect the final 12.5% — roughly $1.6 billion — as well as a 2% royalty on any revenues thereafter.
Guyana earned more than $1 billion last year from its portion of the production sharing agreement with the consortium, but that’s well below industry norms. The International Monetary Fund, among other outside observers, has urged the government to seek better deals as the oil rush contributes to world-leading economic growth, increasing Guyana’s GDP by nearly 60% in 2022.
Guyanese authorities have said they will not push to renegotiate the existing deal, but will demand better terms from any new licensees. Bidding by the industry’s major global players will close in mid-April for 14 new blocks near the consortium’s Stabroek Block.