Oil block auction: More focus to be placed on safety, carbon footprint in new licences – VP Jagdeo

– timely data from oil companies to also be addressed

As the clock for the auctioning of the remaining oil blocks winds down, Vice President Bharrat Jagdeo stated that more emphasis will be placed on safety, timely data collection from oil companies, and managing carbon footprints.
When asked during his recent press conference about Exxon’s 6th Whitetail Project in the Stabroek Block – and key policy considerations the Government is pushing for, the Vice President revealed that there are a few core concerns which the Government will be focusing more on before awarding new licences.

“I can group what our policy concerns are. Now, the reporting relation. The first thing has to do with data. Timely data. We’ve fixed that in the new Production Sharing Agreement (PSA), but we’re moving closer to the new PSA arrangements in future licences. So that you can have more timely data,” Jagdeo said.
“The second group of concerns relates to safety. Safety in the operations. Thirdly, about carbon footprints. They have to demonstrate that the technology is new technology and we’ve seen a reduction in the carbon footprints over the period. So, these are the three major areas of concern that you would see more attention being paid to in future licences.”
Since the Stabroek Block PSA was signed in 2016, it has come in for much criticism from all sections of society. Since then, the People’s Progressive Party/Civic (PPP/C) has come up with a new model PSA that addresses these concerns. According to Jagdeo, they will be seeking to ensure the new PSA is reflected in future licences.
“The new PSA would not apply to Stabroek Block, but there are features of the new PSA, given that they are best practices, that we want to bring to the new licences and put them in the new licences,” Jagdeo informed reporters.
The auction round for the remaining 14 oil blocks offshore Guyana is coming to an end, with companies having until tomorrow, September 12, to submit their bids. Some 14 oil blocks were up for tender – 11 in the shallow area and three in the deep-sea area. The sizes of the oil blocks on auction range from 1000 to 3000 square kilometres (sq km).
Auctioning of the blocks had previously been pushed back, as the Government had signalled its intentions to improve the sector’s regulatory framework before potential investors put in their final bids. When the deadline was extended in July, the Ministry of Natural Resources had released a statement saying that “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.”
They further said that “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.” Jagdeo confirmed during his press conference that there will be no further extensions of the September 12 deadline.
When this process wraps up, evaluations and negotiations will follow before the blocks can be awarded. The Vice President had previously indicated that there were several areas remaining offshore that were not put up to be auctioned off in the current exercise.
Under new conditions, Guyana stands to benefit from signature bonuses as high as US$20 million for the deep-water blocks and US$10 million for the shallow-water blocks. Additionally, all future Production Sharing Agreements (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 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.