Gov’t examining whether Exxon liable for latest compressor malfunction

– VP Jagdeo

Vice President, Hon. Dr. Bharrat Jagdeo says the Government is exploring whether ExxonMobil is liable for its fourth and latest flash gas compressor malfunction.

Dr. Jagdeo made the statement during a recent interview with local commentator, the Guyanese Critic.

Dr. Jagdeo said the Government has a “great interest” in ensuring that this equipment malfunction is resolved. Due to the equipment failure, ExxonMobil was forced to cut its oil production to 30,000 barrels per day (bpd), a significant reduction from its planned 120,000-bpd.

Against this backdrop, the Vice President said reduced production is a loss of output, and consequently, a loss of income and revenue.

He indicated that the Ministry of Natural Resources has since dispatched a letter to ExxonMobil, seeking a copy of the Shareholder’s Agreement. This, he said, will examine whether liabilities accrue to the operator – Exxon – for “non-performance or faulty performance.”

The VP noted that the Ministry has also requested the agreement between Exxon and the supplier of the Floating Production Storage and Offloading (FPSO) vessel – SBM Offshore.

“If there are issues of non-performance that result in a loss of revenue and income to the State of Guyana and to the shareholders, then the appropriate penalty must be introduced. That is the position we have taken,” he stated.

Vice President Dr. Bharrat Jagdeo

Following the announcement of the equipment failure, the Government had said that it is “highly disappointed” with the operator’s inability to resolve this situation to date.

The Administration says it will continue to monitor the levels of daily crude oil output and flaring to determine an economically feasible level of production during this period.

Meanwhile, the Ministry said Exxon’s subsidiary, Esso Exploration and Production Guyana Ltd (EEPGL) and its contractors SBM and MAN Energy Solutions are actively investigating the failure, and assessing repair requirements.

The Government, through the Ministry, the Guyana Geology and Mines Commission, and the Environmental Protection Agency, has been receiving regular updates since this matter arose. The Government recently met with EEPGL to discuss the subsidiary’s findings and plans for a speedy resolution of the issue. Notably, this equipment failure did not affect Guyana’s crude oil lift, which was safely and successfully completed on April 10. This lift was on track with the Crude Lifting Agreement and Lifting Schedule. It was Guyana’s second lift for 2021.

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