(INEWS)In an effort to ensure maximum participation and diversity among the investors in Guyana’s oil blocks, successful bidders will be restricted to no more than three blocks each during the ongoing bidding round.
This was recently explained by Vice President Bharrat Jagdeo, during the just concluded Guyana Energy Conference and Expo. He also explained the various decisions they have taken over the past year when it comes to administering the oil and gas sector.
“We decided we’re going to award a maximum of three blocks per investor because we want a multiple number of investors or investment groups coming in here. Because they can start the exploration activities simultaneously. So, we’d have a faster deployment of exploration dollars in the sectors.”
“We took that crucial decision not to go with an oil and gas company, for many reasons. We also said that we’re going to change the financial terms from those enjoyed in the PSA that was signed by Exxon in the Stabroek Block. You had 10 contracts that were signed, and that had the old fiscal terms. Now, we’ve changed that,” Jagdeo said.
Outside of the blocks currently being auctioned, Jagdeo explained that the Government is also looking to form a bilateral arrangement with other countries that can partner to develop the remaining blocks. Among the names is Kuwait, which he said has just expressed interest in this arrangement.
“We’ve gone out to auction now, for 14 blocks and we still have some areas remaining where we hope to work through a bilateral arrangement with the Governments of Brazil, Qatar, India, and those others who’ve expressed (an interest) … Kuwait has just expressed some interest in that regard.”
President Dr Irfaan Ali launched the much-anticipated first auction of the remaining oil blocks offshore Guyana in December last year as his government moves to have the country’s petroleum resources developed expeditiously.
This competitive bidding process will see 14 oil blocks up for tender including 11 in the shallow area and three in the deep-sea area. These blocks will range from 1000 square kilometres (sq km) to 2000 sq km but with most of the blocks being approximately 2000 sq km. April 14, 2023, has been set as the deadline for the submission of bids, while the Government is hoping to award contracts by the end of the first half of this year.
Government is currently in the process of finalising the new PSA that will guide the terms and conditions of future oil contracts. Vice President Bharrat Jagdeo had disclosed in December that this document would be completed by mid-February 2023, just in time for the close of the months-long bidding process.
Under new conditions, Guyana stands to benefit from as high as US$20 million signature bonus for the deep-water blocks and US$10 million for the shallow-water blocks.
Additionally, all future PSAs will also include the retention of the 50-50 profit-sharing after cost recovery; the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from 75 per cent.
Meanwhile, in order to make this auction more competitive, Government has opened the process to both local and foreign companies/individuals, who will have to meet minimum technical and financial qualifications that will be outlined. Only last month, President Ali invited Asian powerhouses – India and China – to participate in the ongoing licensing round.
As the world’s fastest-growing super basin in recent years, Guyana is estimated to have potential resources in excess of 25 billion barrels offshore. In the oil-rich Stabroek Block alone, which is operated by ExxonMobil and its co-venturers, there are nearly 11 billion barrels of oil equivalent.
To date, there have been some 35 discoveries in the Stabroek Block, where production activities have been ongoing since 2015, and a total of 40 oil finds for all blocks being explored offshore Guyana.