ExxonMobil’s recent move to award contracts for its sixth development project in the Stabroek Block, known as the Whiptail project, has raised eyebrows. Despite not yet securing final approval from the Guyana government, the energy giant has decided to proceed with these contract awards.
Interestingly, Vice President of Guyana, Dr. Bharrat Jagdeo has indicated that his government has no qualms about these contract awards. His reasoning is quite simple: if the project were to be rejected, it would be ExxonMobil’s investment at stake.
The Vice President made this clear when responding to questions from the media regarding the wisdom of awarding contracts to subcontractors for essential components of the Whiptail project, such as floating production storage and offloading (FPSO) vessels, when the project hasn’t received official approval.
Notably, Dutch FPSO builder SBM Offshore recently secured a contract from ExxonMobil to proceed with the Front End Engineering and Design (FEED) for an FPSO vessel for the Whiptail project. This is a significant step in the project’s development. However, it is vital to emphasize that this progression is subject to government approvals in Guyana, which include the green light for the development plan and a final investment decision by ExxonMobil. In essence, SBM Offshore is poised to undertake the construction and installation of the FPSO, even though it is a venture laced with uncertainty.
The Vice President of Guyana, in addressing the situation, acknowledged the inherent risks in such endeavors. Jagdeo said, “The thing is that these are long lead items. A company does this on its own but, this is a risk that they they take on their own,”
“It’s like a big project. There are some long lead items. So if you want to keep momentum, you have to start discussions even before you completed all of the permitting process. But if you don’t get the permit, then it’s it’s your money you lose. You lose your money.” he added.
