Payara licence a major improvement on Liza 1 licence

− changes to environmental and production clauses

– Vice President Jagdeo

The new licence issued to Esso Exploration and Production Guyana Limited (EEPGL) for the development of its Payara well features significant new clauses missing from the Liza 1 well licence issued by the APNU+AFC. 

Vice President Dr. Bharrat Jadgeo on Friday said there were major improvements to the environmental and the production clauses as a result of the review undertaken when the PPP/C took office.

While the initial Production Sharing Agreement (PSA) could not be changed, Government looked for more ways in which Guyanese could benefit. In comparing the two permits, the Vice President said the Payara licence strengthens, and makes provision for important clauses that were not in the Liza 1 licence. This includes clauses on flaring and audits, among other provisions.

With regard to flaring, Dr. Jagdeo explained that once an event takes place, and flaring occurs outside of the permitted period, after 60 days, there is a system which measures the volume of gas flare. In the Payara licence, routine flaring is prohibited and breaches will attract fines, while the Liza 1 licence had no stipulated fines in place for breaches.

The provision for cost estimates in the Payara licence stipulate that operating and development costs are to be submitted to the Government within 90 days of signing the licence. The Liza 1 permit had no provision for EEPGL to provide cost estimate details.

The Payara licence also includes a provision for produced water to be treated according to the established standards, and the Environmental Protection Agency (EPA) to monitor compliance. The Liza 1 permit did not include this stipulation, although the EPA was expected to monitor.

Additionally, in the Payara licence, the clause on safety and compliance requires EEPGL to give the Government US$400,000 every year, for five years, to conduct independent audits for drilling and compliance. This provision was not included in the Liza 1 licence.

With regard to waste management, all waste generated by EEPGL will be remedied by the company and daily and monthly Production reports are mandatory. The first provision was not included in the Liza 1 licence and only monthly production reports were required. Further, the Payara licence strengthens stipulations on the Government’s local content policy, whereas the Liza 1 licence only required compliance stipulated in the 1986 Petroleum Act.