Guyana in good position to leverage oil blocks – oil executive

…as remaining and relinquished blocks go out for auction next year

Guyana, which is expected to go out next year and auction oil blocks both untapped and relinquished, is likely to be in a good position to leverage the value of those blocks when the context of the global oil and gas industry is considered.
This view was expressed by Director and Chief Reservoir Engineer for Mid-Atlantic Oil and Gas, Dennis Pieters. The oil executive was at the time appearing on a webinar hosted by Americas Market Intelligence Analyst Arthur Deakin.
“They’ve got some blocks left and I think the Government would be within its rights to have a bid round, which is what President Ali and Vice President Jagdeo have talked about. A bid round in 2022. And I think that would probably be very successful. They’ve got Block C and the contracts signed by the oil companies including Exxon requires that they relinquish portions of the block, each year,” he said.

“So not only do they have block C, they have portions of blocks that are being relinquished. And these will come up for auction next year. In addition, they’re talking about having a 3D seismic done over these blocks so people can come and bid on it. So, I think it’s going to be open for business in 2022, because like we talked about initially about capitalising on that.”
According to Pieters, whose company alongside ExxonMobil, Total and JHI Associates Incorporated is a co-venturer in the Canje Block, the Government through Vice President Jagdeo has rightly said they will capitalise on the favourable conditions now. According to him, Guyana is in an extremely good position when the overall lack of oil and gas exploration in the world is considered.
“We’re in a good spot right now. There’s not a lot of exploration going on. The dollars have been cut by most companies. This is one of the only areas in the world where they’re actually continuing to do exploration and developing fields. And I think Guyana is in an extremely good position,” he said.

It was explained by Vice President Jagdeo last month that the Guyana Government would be activating and enforcing the relinquishment provision in contracts, which speaks to handing over portions of the awarded oil blocks during the course of the exploration period.
Additionally, Jagdeo had signalled his Administration’s intention of auctioning new oil blocks no later than the third quarter of 2022. This would call for the enforcement of the Relinquishment Provision, thereby adding these acreages to the existing pool of blocks to be awarded.
“We’re hoping that latest next year third quarter, that we will be able to auction the new blocks. That requires us now to aggressively enforce the relinquishing provisions in all of the contracts so that added to the existing pool of areas available, we will have now the relinquished areas which can then form part of the auction that will take place,” Jagdeo had said.
The relinquishment clause is 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.
For the Stabroek, Canje and Stabroek Blocks, operators are required to relinquish 20 per cent of their blocks after the first renewal period; while those of the Demerara and Corentyne Blocks are expected to relinquish 15 per cent within this period.
The Kaieteur Block’s relinquishment provision is said to be 25 per cent, then 20 per cent by the first renewal; with the Mahaicony and Roraima Blocks at 25 per cent. By the time of the first renewal for the Orinduik Block, the operators are not expected to relinquish any portion.
Speaking on the auction, Jagdeo had said at the time that the Government is still to decide whether it would look to increase the value of the areas by conducting a seismic scan of the blocks.
“To go to an auction, we have to make several policy decisions. We’d have to get somebody in who has done auctions before. Secondly, we have to make decisions like some countries are doing to shoot 3G seismic and then auction the block with seismic data which gives you a higher price; or to avoid that, just auction the areas as is,” he had said.