Draft Petroleum Bill to be released on Monday for consultations – VP

…PSA to undergo final policy review

Vice President Bharrat Jagdeo announced that the draft for an updated Petroleum Bill will be released by Monday.
This is another step closer in refashioning the 1986 Petroleum Act to ensure that the oil sector is governed by a modern regulatory framework.
“We’re hoping that by Monday, the draft Petroleum Act will be put out for consultation by Monday. [On Wednesday], I met with the Minister and the staff and we had a discussion for it to be made public for views, consultation, etc,” Jagdeo informed during a press conference on Thursday.
Previously, the Vice President had explained that while Government wants Guyana to have a world-class regulatory environment, it also wants the creation of an environment that is attractive for people to come and invest. He made it clear that the People’s Progressive Party/Civic (PPP/C) would continue to be a stable and not capricious regulator of the extractive industry.
The Petroleum (Exploration and Production) (Amendment) Bill 2021 was first brought to the National Assembly to amend Section 52 of the principal Act. This section dealt with land use.
It specifically targeted work done by a petroleum licensee in furtherance of its operations on State land, Government land, or land that is otherwise controlled or under the management of the Government of Guyana.

PSA review
Meanwhile, another round of policy review will be undertaken for the model Production Sharing Agreements (PSAs). As of now, there are two models of the agreement – one for deepwater and another for shallow water.
The process of finalising the new PSA will guide the terms and conditions of future oil contracts.
“The PSA, we have two models incorporating all the comments already, both for deepwater and shallow water. It is now for another policy review and that will finalise it because we have already gotten comments from everyone. We were hoping that even at the late stage, the Opposition could have still sent in their views. They have not sent in anything,” Jagdeo divulged.
The former APNU/AFC coalition inked the controversial PSA with United States oil major, ExxonMobil, in 2016 to develop the country’s petroleum resources offshore but features such as low royalty – a meagre two per cent, lack of ring-fencing provisions, sweeping cost recovery clauses, tax exemptions, among others, have attracted heavy criticisms over the years.
With the new model Production Sharing Agreement (PSA) that Government is implementing for all new oil exploration projects, Government has expressed optimism that the State’s take will rise to over 60 per cent of the current revenue share.
Under new conditions, Guyana stands to benefit from as high as a US$20 million signature bonus for the deep-water blocks and US$10 million for the shallow-water blocks. Additionally, all future 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 now 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.
At least 14 oil blocks are currently up for tender including 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 but with most of the blocks being approximately 2000 sq. km.
Based on industry feedback, the Guyana Government has extended the deadline for the competitive bidding process from April to July 15, 2023. This was also done to facilitate the advanced pace of modernising the oil and gas regulatory framework.
As the world’s fastest-growing super basin in recent years, Guyana is estimated to have potential resources in excess of 25 billion barrels offshore. In the oil-rich Stabroek Block alone, which is operated by ExxonMobil and its co-venturers, there are nearly 11 billion barrels of oil equivalent.
To date, there have been some 35 discoveries in the Stabroek Block, where production activities have been ongoing since 2015, and a total of 40 oil finds for all blocks being explored offshore Guyana.