No onshore block will be up for auction this round – VP Jagdeo

– says discussions will centre around how to deal with offshore blocks

Vice President Bharrat Jagdeo has clarified that when a decision is made by the Government on whether to auction Guyana’s blocks or not by September, onshore blocks will not be on the table for auctioning.
During his recent press conference, the Vice President was asked what his Administration’s approach will be with onshore oil blocks. According to Jagdeo, the only decisions that will be made will be concerning the offshore blocks, both untapped and under exploration.

Vice President Bharrat Jagdeo

“I think for September, we’re aiming to make a decision for the offshore blocks. Not the onshore blocks, at that time. And it would include what we have now. I don’t know exactly how we’re going to repackage the relinquished blocks. The areas. Or whether we repackage them. But it would include what we have and the relinquished areas,” he explained.
Jagdeo went on to explain that a concern of the Government, is the proximity of residential properties to these onshore blocks. He, therefore, noted that they do not want the decision-making on the offshore blocks to be delayed by sorting through the onshore blocks.
“We have a lot of places where people have properties and stuff like that. So, it becomes a bit more complicated. Because although the Government owns some surface rights, if you give a block near, a man could have a coconut estate or something else there. Like different plots of land. And different activities, the surface rights people have.”
“So, we have to find a way to determine, because people believe everything on their land belongs to them. But the laws of the country since colonial times said sub-surface rights belong to the State. So, it’s a minefield,” Jagdeo said.
Guyana has long been expected to go out and auction oil blocks, both untapped and relinquished. However, there has also been talk about whether Guyana would partner with a company, to develop its untapped oil blocks.

The Stabroek Block offshore Guyana

It was only in February that it was revealed that proposals had been received from various oil operators in Guyana’s waters for them to aid in Guyana setting up a national oil company. However, the Government was at that time still mulling whether it will go this route.
Countries getting into the business side of oil and gas is nothing new. In neighbouring Brazil, Petrobras is a well-known example of a State-owned oil company. Venezuela also has its own State-owned oil company, Petroleos de Venezuela (PDVSA). There is also the Petroleum Company of Trinidad and Tobago Limited (PETROTRIN).
However, the latter two companies have not fared well, with PETROTRIN closing its refinery and laying off thousands and PDVSA closing and then reopening its own, amid Venezuela’s economic meltdown.
Guyana has long been expected to go out and auction oil blocks, both untapped and relinquished. Considering the more than 25 oil finds that have been made by oil giant ExxonMobil in the Stabroek Block, the country 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.
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 and Canje 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.