Guyana's Oil Spigot Sputters: Production Delays Reportedly Hit Revenue

The oil and gas production in Guyana reportedly hit construction delays and has threatened to curtail the rising oil hotspot’s revenue by about $1 billion this year.

Guyana’s $1.9 billion gas-to-power project is facing legal battles and potential cost overruns, reported Reuters.

As per the report, the first phase of a 300-megawatt (MW) power plant is running six months later than scheduled, and full operation is not expected until the fourth quarter of 2025.

Exxon Mobil Corporation XOM is building a 140-mile (225-km) gas pipeline from its offshore Stabroek block to supply the government’s project onshore, as per the report.

Exxon Guyana country manager Alistair Routledge said the company’s part of the project (worth about $1 billion) will be ready by year-end, as promised to Guyana.

The Stabroek block, the site of the country’s first commercial oil and gas discovery in 2015, currently produces crude – about 645,000 barrels per day (bpd), and the new power plant will be the first to use the related gas produced from the oil field that, to date, has been re-injected underground.

Read: Exxon Mobil’s LNG Expansion On Track To Double By 2030: Report

As per the report, the completion of the gas pipeline will require Exxon to pause production in the third quarter at two oil production vessels to connect them to the undersea pipeline.

As per the report, the executive said, “Exxon is not worried about having to shut production this year for a project that will not be ready to accept the gas at least until sometime in 2025”.

Also Read: Exxon’s Earnings Amidst Oil Price Challenges Has Bright Spots, Says Analyst

Investors can gain exposure to the stock via Energy Select Sector SPDR Fund XLE and IShares U.S. Energy ETF IYE.

Price Action: XOM shares are down 0.17% at $121.17 on the last check Monday.

Photo: Del Henderson Jr. via Shutterstock