Oil blocks’ auction extended until July amid strong int’l interest – Govt

…work continues on finalising PSAs, 1986 Petroleum Act

Amid a plethora of interest being expressed by major international players, the People’s Progressive Party/Civic (PPP/C) Government has extended the end date for the auction of Guyana’s available oil blocks to July 15, 2023.
In a statement, the Ministry of Natural Resources explained that the auction of the oil blocks would be extended until July 15, 2023. Previously, the auction had been expected to end on April 14, 2023, after which evaluations and negotiations would have followed and the blocks would have been awarded in May 2023.
“Industry feedback and the advanced pace of modernising the oil and gas regulatory framework underscore the extended bidding period for the nation’s first competitive offshore oil and gas licensing round,” the Ministry said. “The Round, officially launched on December 9, 2022, continues to receive strong global interest, and the Government has benefited from insightful feedback during the consultation periods of the Indicative Terms and Guidelines and the draft model production sharing agreements.”

It was further explained that, having recently concluded agreements with PGS Exploration and CGG Data Services, bidders can have additional 2D seismic data for the blocks at their disposal. This will be available for both future and existing bidders, to better inform their decisions when they are bidding.
Meanwhile, work continues on finalising the model Production Sharing Agreement (PSA), a draft of which was recently released. Additionally, work continues on overhaul of the outdated 1986 Petroleum (Exploration and Production) Act.
“Concurrently, the Government recognizes that the new era of oil and gas development, facilitated by these current and future rounds, must be governed by a modern regulatory framework, and has been thoroughly moving the finalisation of the model PSA, as promised in this Government’s manifesto, and the overhaul and strengthening of the 1986 Petroleum (Exploration and Production) Act.”
In light of overwhelming interest from the bidders, the Government had been mulling an extension of the April deadline for submissions as far back as February. As such, the extension was being considered to allow other interested bidders to get their proposals in order.
Natural Resources Minister Vickram Bharrat had said in February that more than 20 companies have indicated their interest in buying oil blocks, and have already submitted bids. These companies, he had noted, are renowned in the oil and gas industry.
“A lot of companies have been making requests to us to have an extension, because they have to prepare their proposal to send to us so that we may consider. However, it stands at April for now,” Bharrat had explained.
Of the 20 companies that had entered bids, at least half of them had already paid their fees to enter the Government Data Room. Bidders are required to pay a US$20,000 fee that gives them access to the Government’s Data Room.
The sizes of the 14 oil blocks on auction range from 1000 to 3000 square kilometres (sq.km). Under the new fiscal terms in the draft PSA, Guyana stands to benefit from Zs high as US$20 million signature bonuses for the deep-water blocks, and US$10 million for the shallow-water blocks.
Additionally, all future PSAs would 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 fixed rate of 10 per cent; 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.
Only recently, United States (US) oil giant ExxonMobil had said it was awaiting the final terms of the new PSA before it makes a decision on bidding for the remaining oil blocks offshore Guyana that are up for auction.
At the time the new PSA was released, Exxon had already registered for the bidding round. ExxonMobil Guyana President Alistair Routledge told Guyana Times that his company’s interest in the auction is fuelled by its successful oil finds offshore Guyana.
Currently, the 2016 oil contract for the Stabroek Block, signed between the ExxonMobil-led co-venturers and the then Guyana Government, pegs cost recovery at 75 per cent. The remaining 25 per cent of revenue is spilt 50/50 between the Government and the co-venturers, while the country also gets a two per cent royalty from total revenues. (G3) Govt extends oil blocks’ auction until July, amid strong int’l interest