Govt in talks with Middle Eastern, European companies on bidding for oil blocks – Min Bharrat

– says Guyana also attracting interest from US, Latin America & Caribbean

Over a month after the bid round for Guyana’s oil blocks was launched, it can be confirmed that major oil companies ranging from Middle Eastern to European have expressed their interest in bidding for the blocks.
In an exclusive interview with Guyana Times, Natural Resources Minister Vickram Bharrat explained that massive amounts of interest have been received, mostly from companies. Interest has even come from closer to home – the United States (US) and Latin America and the Caribbean (LAC).

“The bid round, that has been progressing well. It was launched in December, and will close in April. And we’re looking to award at least by mid-2023. The evaluation, award, and everything, we’ve got a lot of interest. A lot of companies have contacted my staff at the Ministry for further information and clarification.
“And I can tell you major oil companies from all around the world: from the Middle East, from Europe, the US, we’ve been attracting a lot of attention. Even from our hemisphere – Latin America and the Caribbean – we’ve been getting a lot of interest from the bid round,” the Minister further said.
A Reuters report has meanwhile indicated that Guyana is in talks with Qatar, the United Kingdom (UK), the United Arab Emirates (UAE) and India on direct Government-to-Government allocation of oil blocks.
In October of last year, President Dr. Irfaan Ali had said that some of the blocks that will be available have been set aside for Government-to-Government partnerships. “And as you know, we have some blocks that we’re going to auction off. I think very soon we’re going to move to the auctioning of some blocks. And we have some blocks that are set aside for what is termed a Government-to-Government partnership. We’re looking at all our strategic partners with these blocks,” the President had said.
In December 2022, President Ali officially launched the much-anticipated first auction of the remaining oil blocks. There will be 14 oil blocks up for tender, comprising 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. However, most of the blocks are approximately 2000 sq km. A minimum signing bonus of US$10 million was set for the shallow water and US$20 million for the deep-water blocks.
“We’re hoping that the close of the submission of the bids will be on the 14th of April, 2023, and our timeline is to have contracts awarded by end of May 2023. This, of course, will follow negotiations and evaluation of the bids that we received during this bidding round…,” the President had disclosed.
Each bidder would be charged a participation fee of US$20,000 to join the auction, and according to President Ali, this cost was settled so as to not dissuade interest in the bidding process. The payment of this fee will allow bidders access to a virtual data room which will have all the details on the blocks, so that interested parties can participate in a competitive bidding process.
Guyana has long been expected to go out and auction oil blocks, both untapped and relinquished. There are relinquishment clauses which are typically included in contracts so that companies can relinquish a portion of the block when the renewable period is up, thereby allowing other companies to buy into the respective blocks.
A new model Production Sharing Agreement (PSA) has also been developed by the Government to guide participating companies at the auction on what fiscal terms to expect. The new PSA includes terms like a 10 per cent royalty rate. This is an increase on the previous 2 per cent in the former Government’s PSA it signed with ExxonMobil. The cost recovery ceiling is now 65 per cent, a decrease from 75 per cent. Companies will, for the first time, also pay a corporate tax, 10 per cent.