…says better results will be forthcoming in next round
With General and Regional Elections constitutionally due in 2025, the Guyana Government has ruled out the likelihood of a second bidding round to auction off the country’s remaining offshore oil blocks.
“We’re very conscious that we’re going to be approaching elections next year… I doubt whether we’d go to another auction before the elections,” Vice President Dr Bharrat Jagdeo told reporters at a press conference on Thursday.
In October 2023, Government had announced the award of eight deep and shallow-water blocks, which were auctioned off during the 2022 Licensing Round.
That first 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.
Vice President Bharrat Jagdeo
Among those awarded oil blocks during the bid round was a Guyanese female-led company, Sispro Inc, which received a shallow block (S3) and a deep-water block (D2). Other shallow blocks were awarded to Total Energies EP Guyana BV in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia), which got Block S4; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited, which got Block S7, and International Group Investment Inc of Nigeria, which got two blocks – S5 and S10.
Another shallow block, S8, was awarded to the Stabroek Block partners – ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited. The second deep-water block – D1 – was awarded to Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.
Since then, Government has been in negotiations with these oil block awardees but no contract has been signed.
New PSA
In October of this year, the Natural Resources Ministry announced that most of the bidders have accepted the new model Production Sharing Agreement (PSA), and are either processing the agreement or conducting final reviews.
Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia), is among those bidders that already accepted the PSA and an agreement with the Guyana Government was in the final stages of review.
Delcorp Inc Guyana, comprising Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia, and Ghana-based Cybele Energy Limited have also accepted their PSA along with International Group Investment Inc of Nigeria, which was awarded two blocks offshore.
The Ministry had said in its October missive that it was awaiting a response from the other bidders including the Stabroek Block partners.
Despite the US oil major complaining in the past about the onerous conditions in the new PSA, VP Jagdeo related last month that ExxonMobil has indicated that it is still interest in securing the awarded oil block.
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 an increase of the royalty from a mere two per cent to a now 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.”
Better results
Meanwhile, VP Jagdeo told reporters on Thursday that the first auction could have yielded better results had there been certain things in place. These include the new PSA, which was only finalised mid-last year; the new Petroleum Activities Act, which approved by the National Assembly in August 2023, and the seismic study of the blocks.
“When we went to auction, we made a commitment that…before we finalise the auction, we will make those available to the companies that were going to participate in the auction. It took us a long time, given their complexities, to finalise those two seminal pieces of policies and resulting in us having to extend the completion of the auction several times. Now, these documents are ready. So, in the next round that we plan to hold sometime in the future, these would be available upfront to the companies that want to participate in the auction,” Jagdeo stated.
When it comes to the seismic data, Government has shortlisted four firms to potentially conduct the 3D seismic survey on Guyana’s oil resources.
Among these contenders are American company TGS Magseis, which in 2023 acquired Magseis Fairfield; the Norwegian company that was shortlisted is PSS-GEO, which provides geophysical services and seismic data processing to the oil industry; British firm Shearwater GeoServices Limited, which partnered with Guyanese firm Latitude Energy Incorporated, and British company, CGG Beritas Services UK Limited.
“And since we’ve gone to the [first] auction with very limited amount of seismic data, we’re hoping now… [that the completed seismic study] would allow us in the future to go to auction with a bank of data that would be available to the companies to make more informed decisions as to the potential offshore. And so, these three conditions, I think, will help future auctions to get better results,” the VP posited. (G8)
