Stabroek Block still viable with oil prices below US$40 – study finds

By Kurt Campbell 

Despite the onset of COVID- 19 and the drop in global oil prices, an updated fiscal benchmarking study on Guyana has found that the Stabroek Block remains viable even with oil prices falling below US$40.

The newly compiled WoodMac report – Guyana Fiscal Benchmarking Study – was done by Wood Mackenzie, a global energy, chemicals, renewables, metals and mining research and consultancy group with an international reputation for supplying comprehensive data, written analysis and consultancy advice.

During a virtual presentation of the findings of the study on Wednesday, Wood Mackenzie representatives Juan Agudelo and Michael Stelnhacker repeatedly stated Guyana’s good price resilience and small fiscal deterrent.

The study noted that the Stabroek Block still has 75% of its expected resources to be developed with phase three accountable for over 16%.

The future possibility is that Stabroek’s value would increase by 70% from a US$40 to US$50 Brent price change.

Agudelo, who is the Director of Upstream Consulting at Wood Mackenzie, explained that even with this, state shares will be maintained at 50 – 60%.

“If higher prices are achieved the value could be increased and payout period decreased,” he added.

The team warned of possible project delays to future phases of the project which could erode a significant sum of the overall project and as a consequence could see the state share value decreasing.

Agudelo said the Guyana Government can lose over $1.6 billion if there is a delay by one year with that figure subject to increase for longer periods of delays.

“A delay in one field can impact future developments… the obvious is that it will push subsequent developments back and impact supply chains in other development plans,” he added.

The Stabroek block with 17 discoveries currently is being developed by US oil giant ExxonMobil.

Agudelo said COVID-19 has no doubt impacted Exxon’s progress with the Liza aspect of the production just as it has impacted the global industry.

The good news is that while other tight oil and DW supply sources are “out of the money” the breakeven price for Stabroek is very competitive, the study found.