Companies exploring for oil offshore Guyana have to follow rigid timelines – VP Jagdeo

– to ensure activity is always ongoing & generating opportunities for locals

The companies currently bidding for Guyana’s oil blocks will have to adhere to rigid timelines for the exploration and production of oil, if successful. This is in order to prevent companies from just sitting on Guyana’s oil resources for years without any developments coming to the country.
Making this pronouncement was Vice President Dr. Bharrat Jagdeo during the local content summit on Tuesday. The Vice President explained that Government’s intent is to ensure activities are always ongoing in the oil and gas sector, and opportunities are constantly being generated for local content.
“We have said that all we are doing is to sustain the level, and we’ll do so aggressively and unashamedly to sustain high levels of activity for the next, at a minimum, 50 years. And that means licensing the new FPSOs consistently, and encouraging investments. It means going out, as we’ve done, to auctions in the manner that we’ve done so,” he said.
Jagdeo pointed out that there can be between five and 14 investors in the oil blocks currently on auction. This is because the blocks have been limited to no more than three per investor. One thing is clear, however, Jagdeo noted: whoever successfully owns and operates the block will have rigid timelines within which to start exploration and development.
“Because we’ve limited the allocation up to three blocks per bidder. So, you can potentially have a minimum of five persons or companies succeeding. They all have to be exploring at the same time, with very rigid timelines that will bump up activity levels in the country, which means a lot for the locals,” the Vice President further said.
The sizes of the 14 oil blocks on auction range from 1000 to 3000 square kilometres (sq.km). Among the fiscal terms for the blocks is a 10 per cent royalty and 50/50 profit sharing after cost oil recovery.
Government’s extra steps to guard against companies keeping blocks for years without drilling them come in the wake of its experience with Canadian oil company CGX Energy. Both the Corentyne and Demerara blocks had been in CGX’s hands for some time without being drilled.
Earlier this year, CGX Energy announced it had completed what has been a month-long process to relinquish its stake of the Demerara and Berbice blocks, a decision that the company had said would allow “other interested parties” to explore for oil in the blocks.
The Guyana Government launched the current oil blocks’ auction in December 2022, putting 14 areas offshore up for grabs – 11 in the shallow area and three in the deep-sea area.
Natural Resources Minister Vickram Bharrat had previously disclosed that more than 20 renowned oil and gas companies have indicated their interest in buying oil blocks, and have already submitted bids.
He had also indicated that, given the overwhelming interest in the auction, the Government is mulling an extension of the April deadline for submission of bids. This has since become a reality, as the Government subsequently confirmed that it would be amending the bid round schedule.
Previously, Government had been aiming to keep the competitive bidding round open until April 14, 2023, after which evaluations and negotiations would follow. The Government had set a timeline for awards at May 2023. However, this will now be extended. Government also revealed that all 14 blocks have received Expressions of Interest (EOI) from bidders.
“The indicative Guyana 2022 Licensing Round Schedule will be updated at www.petroleum.gov.gy/guyana-offshore-licensing-round-2022 and www.nre.gov.gy which will reflect the new timeline for the publication of the finalised Terms and Guidelines, Model Petroleum Agreement and process of bidding — all adjusted to facilitate maximum participation from global interest.
“Official Expressions of Interest (EoI) have been received for all fourteen blocks for tender of the Guyana 2022 Licensing Round, demonstrating global interest in Guyana’s shallow and deepwater offshore acreage,” the Ministry further explained.