Green light for Saipem to move ahead with work on ExxonMobil’s fifth oil development off Guyana

Italian oilfield services provider Saipem has been given the go-ahead to proceed with the final phase of work, which was awarded last year for ExxonMobil’s recently sanctioned $12.7 billion oil development project in Stabroek block offshore Guyana.

This authorisation, received from ExxonMobil and its Stabroek block coventurers, for the final phase of the Uaru oil field development project in Guyana, comes after Saipem was awarded a large contract in December 2022 by the oil major for the project, which is situated at a water depth of around 2,000 metres.

Furthermore, Saipem defines a large contract as being in a range between $500 million and approximately $1 billion. In accordance with the terms of the original award in December 2022, Saipem initiated some limited activities, including detailed engineering and procurement.

The Uaru development story started its first chapter in January 2020 when ExxonMobil announced Uaru-1 as the 16th discovery in the Stabroek block. The well encountered approximately 29 metres of high-quality oil-bearing sandstone reservoir and was drilled in 1,933 metres of water.

Once April 2021 rolled in, the U.S. energy giant reported another oil discovery in the Uaru-2 well, which encountered approximately 36.7 metres of high-quality oil-bearing reservoirs including identified intervals below the original Uaru-1 discovery. ExxonMobil submitted for approval a plan for the development of Uaru to the government of Guyana in 2022.

The all-clear signal for Saipem to proceed with the final scope for the Uaru project arrived only days after the U.S. oil major made a final investment decision (FID) to proceed with its fifth oil development project in Stabroek block, after receiving government approvals.

Moreover, the final phase of the awarded scope of work to Saipem includes the design, fabrication and installation of subsea structures, risers, flowlines, and umbilicals for a large subsea production facility. The Italian oilfield services giant will perform the operations using its flagship vessels: FDS2 and Constellation.

Saipem was previously awarded four other subsea contracts by ExxonMobil Guyana for developments in the same area: Liza Phase 1 and 2, Payara, and Yellowtail. The company claims that this further consolidated its presence in the country.

ExxonMobil’s Uaru project in the Stabroek block is targeted to come on stream in 2026. This development will target an estimated resource base of more than 800 million barrels of oil and include up to 10 drill centres and 44 production and injection wells.

Japan’s MODEC is constructing the Uaru FPSO, which will be called Errea Wittu. Based on MODEC’s M350 newbuild design, it will be able to produce 250,000 barrels of oil per day. In addition, the FPSO will have an associated gas treatment capacity of 540 million cubic feet per day and a water injection capacity of 350,000 barrels per day.

The Stabroek block covers 6.6 million acres (26,800 square kilometres) and is operated by ExxonMobil’s affiliate Esso Exploration and Production Guyana with a 45 per cent interest. The company’s partners in the block are Hess Guyana Exploration (30 per cent) and CNOOC Petroleum Guyana (25 per cent).

ExxonMobil plans to have six FPSOs with a gross production capacity of more than 1.2 million barrels of oil per day online on the Stabroek block by the end of 2027, with the potential for up to ten FPSOs to develop the estimated gross discovered recoverable resources of more than 11 billion barrels of oil equivalent.