4 PSAs to be signed this year, 2 production licences to be issued – Bharrat

Government is set to sign four Production Sharing Agreements (PSA) this year, with as yet unnamed companies from the 2022 bid round, in addition to the Government’s plans for signing two production licences.
During day one of the consideration of the budget estimates on Friday, questions were raised about the 2022 bid round and the status of these contracts.
According to Natural Resources Minister Vickram Bharrat, the delay lies in the Government’s efforts to perfect the new model Production Sharing Agreement (PSA).
“The PSA that was signed in 2016, Mr Speaker, it covers the Stabroek Block. And I want to say to my Guyanese brothers and sisters, that the PSA covers only one block. The model PSA that we will develop, will cover all the blocks outside of Stabroek. And there are many others.”
“The Canje, the Kaieteur, the Orinduik, the Roraima, the Kanuku, the Corentyne, and now we have the new ones that were auctioned. Mr Speaker, the new fiscal terms in the PSA, as promised, will bring additional benefits to Guyanese,” Minister Bharrat said.

Bharrat explained that the benefits of the new PSA include 10 per cent royalty and corporate tax, the lowering of the cost recovery ceiling to 65 per cent, and 50-50 profit-sharing after cost recovery.
It was also revealed that two production licences are expected to be signed this year, which will cover both oil and gas production. Meanwhile, there are four PSA’s which will be issued to successful bidders from the 2022 bid round which will be issued this year.
“With regards, the four PSA’s that the Honourable Member mentioned, that the Honourable Member is enquiring of; it is to deal with the bid round that we had. And those are the four PSA’s that will be awarded or signed, in 2025, with the companies that will be awarded those four blocks. So that is the four PSA’s that will be awarded in 2024,” he explained.
“But the four PSAs don’t mean four different PSAs. It just means four PSAs for four blocks. So, in no way, we are doing specific PSAs for a block. The PSAs for all blocks must be the same. Shallow. And all must be the same for deep. The fiscal conditions are all the same. It is just four PSAs for four new blocks that will be awarded,” he also said.
The bid 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 auction. In total, there were 14 offers made on those blocks – two deep-sea blocks and six shallow-area blocks.
While Minister Bharrat declined to name the companies that will sign the PSA with the Government this year, it is a known fact that as of October 2024, four out of the six bidders in the 2022 oil auction had already accepted new model PSA.
According to a list released by the Ministry, 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 – had already accepted the PSA, and their agreement was 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, had also accepted their PSA, which was in the final stages of review.
Lastly, the Ministry of Natural Resources had announced that the International Group Investment Inc of Nigeria, which bid for blocks S5 and S10, had accepted the PSAs for both blocks, which were being processed.
The 2016 PSA for the Stabroek Block, signed between the Exxon-Mobil-led co-venturers and the then APNU/AFC (A Partnership for National Unity/Alliance For Change) 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.
The new model PSA includes an increase of the royalty from a mere two per cent to 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.
Back in February 2024, Vice President Bharrat Jagdeo had 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.