Guyana has no plans to cut crude output despite a plunge in oil prices, the government's top energy official said on Monday, adding that shutting down production could prove costly and harm future output.
Mark Bynoe, the director of the Department of Energy, said the country's crude production averages between 75,000-80,000 barrels per day (bpd) and is expected to ramp up to 120,000 bpd by early June. The production and storage vessel at the offshore Liza field has storage capacity of 1.6 million barrels, he said.
A drop in oil consumption due to the coronavirus outbreak has led to oversupply and a price collapse, just as a consortium led by Exxon Mobil Corp ramps up production at Liza, where Guyana began producing crude for the first time in its history in December.
Exxon operates the Stabroek block, which includes the Liza field, in a consortium with Hess Corp and China's CNOOC Ltd.
Bynoe told reporters that despite the drop in demand, the country was not having trouble finding vessels for exports. When asked about the possibility of buying storage space aboard vessels, Bynoe said that the government would consider all options but that floating storage is expensive.
"This is a time to keep current production as is and do nothing that could jeopardize the operational integrity of Liza," Bynoe said. "Shutting down existing production can prove costly and detrimental to any future production."
The South American country has no onshore crude storage capacity.
Exxon said last week that challenges rotating crews due to the impact of COVID-19 "temporarily slowed" its drilling campaign in Guyana, and that it now expected to reach its production objective of 750,000 bpd by 2026, rather than 2025.
Bynoe acknowledged that coronavirus-related restrictions were impacting drilling. He said there were currently two active drilling rigs operating in the country's waters, and two on standby.
Exxon also said development of its Payara field, the consortium's third major project in the Stabroek block, was delayed due to political uncertainty.
Guyana held presidential elections on March 2, but is currently awaiting a recount after the opposition questioned the integrity of the results.
Bynoe said the government had sent Exxon several "matters to be addressed" before it approves the company's Payara field development plan, though he declined to discuss specific issues.
"This is not just a case of politics," Bynoe said. "There are some other improvements to be made."
(Reporting by Luc Cohen Editing by Marguerita Choy)