Local financial advisory firm SphereX has backed the Government’s decision to grant ExxonMobil an exploration permit for the Jacunda-1 well, saying Guyana should step up the search for oil while production from the Stabroek Block is still rising.
In a November 9 op-ed responding to concerns raised by Opposition Member of Parliament K. Sharma Solomon, SphereX Executive Director Joel Bhagwandin said it takes years to move from an oil discovery to production. He argued that waiting for output to decline before stepping up exploration could leave Guyana with fewer options to sustain its petroleum revenues.
SphereX’s September model projects that Stabroek output could reach about 1.3 million barrels per day in 2028 and remain at that level through 2040. Under its scenario without new resources, production falls to about 783,000 barrels per day by 2046 and 114,000 barrels per day by 2051. The figures are projections from the firm’s own model.
“Resource replacement must begin before Stabroek’s decline materially narrows the petroleum-revenue base,” Bhagwandin said.
Bhagwandin also addressed concerns over the cost of exploration, saying ExxonMobil and its partners fund the drilling upfront under the 2016 Stabroek production sharing agreement. He said eligible costs can be recovered from a share of production, subject to a ceiling and verification. The amount set aside for cost recovery affects how much oil is available to be split as profit oil between the Government and the companies.
Beyond Jacunda-1, SphereX urged the Government to begin preparing another competitive offshore bidding round. Bhagwandin said starting that work while output is still growing would give Guyana more time to find and develop new resources before production from existing discoveries begins to decline.
