ExxonMobil, SBM reportedly discussing fourth FPSO for Stabroek

The US-based super-major ExxonMobil is reportedly in discussions with the Dutch contractor SBM Offshore on the construction of a fourth floating production, storage and off-loading (FPSO) for installation at the Stabroek block offshore Guyana.

Two sources close to the matter told Reuters last week that the parties had already begun negotiations. One of the key subjects under discussion is a proposal for building some of the components of the FPSO in Guyana itself, they noted.

The sources did not say whether any specific local-content contracts were on the agenda, but Reuters noted that the proposal was in line with the Guyanese government’s efforts to ensure that local firms have the opportunity to contribute to hydrocarbon projects. It quoted Bharrat Jagdeo, the country’s vice-president, as saying: “We are hoping that more and more of the components could be fabricated in Guyana.”

According to one of Reuters’ sources, ExxonMobil may choose a contractor to build its fourth FPSO within six months. As of press time, neither the US giant nor SBM Offshore had commented on the matter.

ExxonMobil has said it wants to install an FPSO capable of handling 250,000 barrels per day (bpd) of crude oil at Yellowtail, the target of its fourth development project at Stabroek. Vessels of this size typically carry a price tag of $2.5-3.0bn, Reuters noted.

The US company has already awarded three Stabroek-related FPSO construction contracts to SBM Offshore. The Dutch-based company has already completed two of the vessels: Liza Unity and Liza Destiny, which have been installed at the Liza-1 and Liza-2 production sites respectively. The third, which will be known as the Prosperity, is under construction at the Keppel shipyards in Singapore.

Officials in Georgetown have made clear that they want Guyanese firms to play a role in the construction of FPSOs and other offshore oil and gas infrastructure. Earlier this year, Guyana's Ministry of Natural Resources published the first draft of a local content policy aimed at promoting the use of local workers and contractors on future projects. It is expected to present a formal bill outlining requirements for ExxonMobil and other international oil companies (IOCs) to Parliament in the next few months.

Equity in the Stabroek block, which contains more than 10bn barrels of oil equivalent (boe) of recoverable reserves, is split between ExxonMobil Guyana, the operator, with 45%; Hess Guyana Exploration, with 30%; and China National Offshore Oil Corp. (CNOOC), with 25%. The partners brought Liza-1, their first development project, on stream in December 2019, and the oilfield is now yielding about 120,000 bpd. They are on track to launch Liza-2 in early 2022, followed by Payara in 2024 and Yellowtail in 2025.