“We are very happy with 8 bids received for oil blocks” – Pres Ali

…says Guyana went to auction at challenging time for oil producers

The Guyana Government is satisfied with the response received from the just-concluded oil blocks auction which saw bids submitted for eight of the 14 remaining blocks offshore Guyana.
This is according to President Dr Irfaan Ali on Wednesday during an appearance at an event hosted by The Dialogue in Washington, DC.
Launched in December 2022 with 14 blocks offshore Guyana, the auction closed off on Tuesday after being extended twice as Government worked on improving the petroleum sector’s regulatory framework before potential investors put in their final bids.
At the time of the closure, there were bids from six bidders for eight of the 14 oil blocks.
During the event on Wednesday, President Ali was questioned about the outcome of the auction which he described as a tremendous accomplishment.
“We went out to an auction at a time when major economies in the world are basically saying to oil producers, ‘we’re not gonna finance you’. So, you’re going to a market where raising capital is an issue. Many countries went to the same market and got no response for their auction. We went to this market with 14 blocks and we got response for eight blocks. We’re very happy… That is significant. That cannot be minimised in any way, shape or form because there are many countries that went out and got no attraction,” the Head of State posited.
Over the years, several of Guyana’s close bilateral partners have expressed interest in obtaining oil blocks here. However, there were no bids from any country.
Asked about this, the Head of State said that he was not disappointed, and noted that there were still avenues for collaboration with these nations in the oil and gas sector here.
“There are many countries that would’ve expressed a preference for Government-to-Government exploration and relation on this issue… that option is also there,” he stated.
Among the countries that have expressed a willingness to work at a Government-to-Government level were India, Qatar and more recently, the Dominican Republic.
President Ali explained that before entering such an arrangement, his Administration wanted to ensure there was transparency is the award of the remaining oil blocks.
“What we said is first of all, we must put all the blocks out there and have an open, transparent public process, and that is what we’re proud of. We’re have been able as a newcomer in this business to demonstrate great transparency and openness in putting out the blocks for a public auction. And what we’ve seen is a number of major companies if you look at the consortiums,” the Guyanese Leader stated.
The 14 oil blocks that were up for tender included 11 in the shallow area and three in the deep-sea area, ranging from 1000 to 3000 square kilometres (sq km).
It is expected that the awarding of the new oil blocks will be done by the end of this year.
US oil major ExxonMobil, which is already producing oil offshore Guyana, is one of the six oil companies that submitted bids for the blocks. The other companies are SISPRO INC (Guyana); Total Energies EP Guyana BV; Qatar Energy International E&P LLC; Petronas E&P Overseas Ventures SDN BHD (Malaysia); Delcorp Inc Guyana and Watad Energy and Arabian Drillers of Saudi Arabia; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited; International Group Investment Inc and Montego Energy SA (London).
Vice President Bharrat Jagdeo had previously stated that when the auction wrapped up, evaluations and negotiations would follow before the blocks could be awarded. The Vice President had previously indicated that there were several areas offshore that were not put up to be auctioned off in the current exercise.
Under new conditions, Guyana stands to benefit from signature bonuses as high as US$20 million for the deep-water blocks and US$10 million for the shallow-water blocks. Additionally, all future Production Sharing Agreements (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 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.
Guyana, with ExxonMobil as the operator, began producing oil on December 20, 2019, in the Stabroek Block, which is 6.6 million acres (26,800 square kilometres).
Exxon, through its local subsidiary Esso Exploration and Production Guyana Limited (EEPGL), holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
Since last year, Guyana has been recording weekly lifts in the Stabroek Block with oil production now at 340,000 barrels per day (bpd) from the <<<Liza Destiny>>> and <<<Liza Unity>>> Floating Production, Storage and Offloading (FPSO) vessels. With EEPGL making weekly lifts, Guyana’s crude entitlement of one million barrels occurs monthly from the two FPSOs.
ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027. Production has already started in the second phase, with the <<<Liza Unity>>> FPSO vessel in operation.
The third project – the Payara development – will target an estimated resource base of about 600 million oil-equivalent barrels, and was at one point considered to be the largest single planned investment in the history of Guyana.
Meanwhile, the Yellowtail development, which will be oil giant ExxonMobil’s fourth development in Guyana’s waters, will target a mammoth 250,000 bpd. (G8)