The Department of Energy (DE) continues to administer the existing contracts, while building out a framework for the effective and efficient management of the sector and ramping up its preparations for first oil. It is within this vein that the following need to be contextualized.
Preparations for First Oil
• The DE has contracted Ms. Virginia Markouizou as its Crude Marketing Specialist, as well as Mr. Juan Lopez as our Commercial Specialist for a year in the first instance, with the possibility of renewal for at least another year. The contract for Mr. Matthew Wilks was also extended into Q1 of 2020. He continues to be an adviser to the DE on petroleum matters and contract management.
• The DE is concluding contractual arrangements with a Petroleum Accounting Specialist and a Natural Gas Specialist to be signed before the ending of the year as we are currently in contract negotiation mode with both of these individuals. All of these positions were advertised and applied for through a competitive process.
• The Crude Lifting Agreement (CLA) was finalized and signed on December 10, 2019. As previously indicated it lays out the modalities to operationalize the crude lifting arrangements as per the AIPN template.
• The DE and its sister agencies are working with the operator and its Co-vs to reach consensus with regards to the Market Price Determination Procedure and Provisional Crude Oil Basket for marketing Guyana’s crude as per Article 13 of the PSA. We are aiming to conclude this process shortly.
• The GNBS, with assistance from Bureau Veritas was able to complete the water draw exercise and the inspection of the critical measurement points on the FPSO during the month of November 2019. They continue to be engaged actively with the DE and the Operator. Furthermore, we are in discussions with the Canadian High Commission for staff members of the Bureau, along with those from GGMC-PU and GRA to receive further training in measurements, calibration and testing under the existing MoU between the GoG and GNFL. This training is expected to occur in January 2020.
Marketing of Guyana’s Crude Entitlement
The DE, after careful consideration and advice from its experts and the Public Procurement Commission (PPC) has sought to pursue a two phase approach aimed at marketing Guyana’s crude entitlement. In the short term, beginning this week, the focus will be on setting national benchmarks. Criteria for selection included IOCs having a global refining footprint and integrated oil value chain, as well as being in a position to support all operating procedures of the 3 cargoes. Furthermore, given Guyana’s inexperience and the impending early date of the first lifts, an introduction phase of the grade is more advantageous to Guyana at this time. Other considerations based on expert advice are:
1. The full extent of the quality of the crude is not yet known. It usually takes several lifts to determine crude only quality and the cost of refining it: Perception is reality and value equals money. The DE is seeking to protect the value of this national resource through taking this approach.
2. The true economics of the LIZA Grade is yet to be determined
3. Guyana needs to establish a quality and quantity standard.
In phase 2, which the DE has already been on record as indicating, it will be going to market with a request for proposal inviting all companies that have an interest to bid for the marketing of Guyana’s portion of oil on a longer term basis.
The DE remains committed to securing the best value from these resources for the people of Guyana in a transparent manner.
Lisa Unity
• Preparations are continuing in earnest with an accelerated date for First Oil.
• Facility hook-up and commissioning progressing well.
Lisa Unity FPSO
• The Hull for the Liza Unity is about 97% completed and is being built in Shanghai.
• Topsides Fabrication are continuing at Dynamac and Keppel in Singapore, and good progress is being achieved.
• Several trees/tubing heads have been completed and are awaiting shipment to Trinidad from Brazil and then into Guyana.
• Line pipe fabrication (Japan) ~99% complete; pipe insulation ongoing (Mexico/US); buoyancy modules 80% complete (UK)
• The Operator is working with the DE to include Guyanese expertise in various stages of the Unity’s completion as per the FDP approval.
Payara FDP
• The DE with the GGMC has commenced preliminary review of the FDP based on experience gained under the Liza 1 & 2 FDPs.
• The procurement for recruiting the third party reviewer is advanced as are in the contract negotiation phase.
Local Content
• Local Content Policy Consultant has submitted his final report and Policy is being edited with a completion date of December 2019 still being the aim of the DE.
• Working with the Operators to commence reporting on local content performance as per the matrices in the Final Draft Policy.
• EEPGL is working with the Council for Technical Vocational Education and Training (C-TEVT) on revising the curriculum for electrical, welding and fabrication Level 1 program. Training of trainers to begin in July/August 2020 to roll out the revised curriculum.
• Facility upgrade in some laboratories planned after a third party assessment is completed. This Third Party assessment is projected to be completed by Q1 2020.
• The last report indicated that over 1,529 Guyanese are directly employed with the operator and its contractors, with 76% of these being in the skilled and professional categories. The representation of those employed in the sector was from Regions 4, 3 and 6. Additionally, the company engaged with over 435 Guyanese vendors, and spent over US$82 million in the third quarter, and increase of more than 150% over the 2018 figure.
• Government is working with both CGX and Tullow to develop their local content plans. We are encouraged by the continued contributions made to raising capacity and standards in Guyana. As such, the DE is encouraged by the recent US$2 million donated to the University of Guyana from Halliburton for capacity building at the institution. This was a relationship brokered by the DE and the grant signed off on at the recently held Guyana International Petroleum Exhibition and Summit (GIPEX 2019).
Cost Recovery Audit
The contract for the firm to complete the cost recovery audit for the historical costs of US$460 was signed. The contract was awarded to IHS Markit and the company has commenced its work with an in-country visit on December 9 – 11, 2019. The DE and the GGMC will be working along closely with the Guyana Revenue Authority (GRA) on this project. Additionally, the DE has secured legal expertise to assist the audit process.
Legislative Framework
• The tender for an international oil and gas law firm to revise/replace or develop legislation for Guyana’s Oil and Gas Sector is almost complete as we are in the contract negotiation stage. We are hoping to complete the process before Christmas 2019.
GIPEX 2019
Output
• Increased number of delegates and exhibitors
• Increased participation by companies
• Increased number of speakers
• Increased overall attendance
• Positive media coverage— pre-event, during event and post-event
• Feedback on presentations by speakers as well as feedback from exhibitors via interviews, media updates and evaluations
Outcomes:
• Exposure of exhibitors, delegates and other participants both locally and internationally
• Positive interaction among multiple stakeholders
• Circulation of valuable industry information among stakeholders for their mutual benefit and the benefit of Guyana
DE Progress – Key Areas
• Effective administration of the Sector through, both contract management and setting a framework in place for the future. For example, apart from recruiting a contract management specialist, the DE, with assistance from the IDB has completed a PSA process mapping manual, which it will then launch via an electronic platform for easier application and implementation.
• With the assistance of the IDB it has also completed its Functions Manual, Organizational structure, and budget
• The DE is building out its structure with a number of new hires (15) since moving to its new location in Brickdam, Georgetown. Nine of these were technical and six administrative
• Deepening our engagement on gas to shore possibilities, with the projection of gas being able to land on-shore by 2023/24.
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