…says awaiting response from Sispro, Exxon & partners
The blocks that were put up during the auction
The Natural Resources Ministry (MNRE) has revealed that most of the bidders from the 2023 oil bid round have accepted the new model Production Sharing Agreement (PSA), and are either processing the agreement or conducting final reviews.
According to a list released by the MNRE, Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia) – which bid for block S4 – have already accepted the PSA. Currently, their agreement is in the final stages of review.
Delcorp Inc Guyana, comprising Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia, which bid for block D1; and Ghana-based Cybele Energy Limited, which bid for block S7, have also accepted their PSA, which is in the final stages of review.
International Group Investment Inc. of Nigeria, which bid for blocks S5 and S10, have accepted the PSAs for both blocks, which are being processed.
However, the MNRE explained, Stabroek Block partners ExxonMobil Guyana Ltd, Hess Guyana Lt & CNOOC, which bid for block S8, are reviewing the PSA.
The MNRE has also said it is awaiting a response from local women-led company Sispro Incorporated, which bid for blocks D2 and S3.
Chart showing the bidders in the bid round
The People’s Progressive Party/Civic (PPP/C) Administration last year introduced a series of stringent terms and conditions for new oil deals that the country would sign. These include 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 the previous 75 per cent, while maintaining the retention of the 50-50 profit-sharing after cost recovery.
The 2016 oil contract for the Stabroek Block, signed between the ExxonMobil-led co-venturers and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Coalition Government for production in the oil-rich Stabroek Block, had been heavily criticised for low royalty, lack of ring-fencing provisions, and cost oil claims that saw Guyana losing billions, among other issues.
Back in February, VP Jagdeo noted that the Government is willing to consider reviewing the non-fiscal terms in the new PSA. Based on feedback received, it was said that Guyana’s new PSA is one of the toughest oil contracts in the market.
According to the Vice President at a press conference earlier this year, “We got a lot of feedback that the increased fiscal terms might be acceptable, but there were some several other areas where the conditions were too tough. We had too tough a condition globally…If they become too onerous, that is where we may have to make adjustments… [But] we made it clear there will be no changes on the fiscal terms. We’re not changing the fiscal at all.”
The bidding round, which was launched in December 2022, closed off in September 2023 with six companies bidding on eight of the 14 blocks offshore that were up for grabs. In total, there were 14 offers made on those blocks – two deep-sea blocks and six shallow-area blocks.
Review of the non-fiscal terms would be a key factor as the Guyana Government prepares for its second auction, possibly at the end of this year. Government is awaiting Exxon’s relinquishment of 20 per cent of oil-rich Stabroek Block this month to determine the schedule of the next bidding round.
Jagdeo had noted previously that the Stabroek Block relinquishment would generate excitement for the next auction, and Government would not want to kill interest if potential investors find the current terms and conditions in the new PSA onerous. (G-3)
