Oil blocks’ auction: Govt negotiating PSA with Qatar, France & Malaysian consortium

– as other awardees still being screened

Vice President Dr Bharrat Jagdeo on Thursday disclosed that the Government has cleared the way for the consortium of TotalEnergies, QatarEnergy, and PETRONAS to move on to the negotiation phase of the contract award.
This consortium of TotalEnergies – a French company; QatarEnergy – a Qatari state-owned company; and the Malaysian state-owned oil firm PETRONAS, is the only awardee from the 2022 oil blocks’ auction that has gotten this far.
“[The consortium] has cleared the Cabinet already, and it’s moving forward… Now that they received the Cabinet’s approval, it’s a routine matter to complete [discussions for a petroleum agreement],” Jagdeo told reporters at his weekly press conference on Thursday.
Natural Resources Minister Vickram Bharrat subsequently told <<Guyana Times>> on Thursday that negotiations have already commenced with the consortium. “We are finalizing the negotiations on the PSA (Production Sharing Agreement); the non-fiscal terms,” the minister stated.
He explained that, during the screening process, the Natural Resources Ministry did its due diligence on the consortium, which also submitted all required documentation, including its work programme.
Last October, the Government announced the award of eight deep and shallow-water blocks which were auctioned during the 2022 Licensing Round. The TotalEnergies, QatarEnergy and PETRONAS consortium, which got Block S4, was one of six companies awarded shallow blocks offshore Guyana. Other shallow blocks were awarded to Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited, which got Block S7; International Group Investment Inc of Nigeria, which got two blocks – S5 and S10; and the Stabroek Block partners – ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited, which got Block S8.
The remaining shallow block, S3, was awarded to a Guyanese female-led company, Sispro Inc., which also received a deep-water block (D2).
The second deep-water block – D1 – was awarded to Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.
Jagdeo disclosed during Thursday’s press briefing that the screening of these remaining awardees is still ongoing. “Most of the others, they’re still in discussions on the PSA, because a lot of them have issues with the PSA – the legal terms, not the fiscal terms, but the other obligations; they’re saying it’s too rigid. We’re having discussions,” he stated. Moreover, the Vice President added that some are still looking for partners and operators because they’re unable to conclude or move ahead with their original submissions. “So, unless those issues are dealt with beforehand…it’s not going to go to Cabinet…Only when we’re sure, then we take them to Cabinet,” Jagdeo posited.
Only last month, the Vice President said Government wants to streamline the non-fiscal terms to have uniformity in all of the new oil contracts that would be signed in the future.
“At Cabinet level, the last thing we want is to have the fiscal terms preserved in every contract; but then, in every contract, the other conditions of the contract for the same type of work are changing. So, what we want is a kind of uniform [non-fiscal] clauses in all of the contracts, because if we go earlier with one and then we’re negotiating the technical agreements with the others, then we may end up with a different set of concerns raised, etc.,” the VP last explained in April.
The review of the non-fiscal terms would be a key factor as the Guyana Government prepares for its second auction, possibly at the end of this year. However, even as it is willing to flex on those conditions, Government is adamant about not changing the new fiscal terms, which include the increase of the royalty from a mere 2% to now a 10% fixed rate; the imposition of a 10% corporate tax, and the lowering of the cost recovery ceiling to 65% from the previous 75%, while maintaining the retention of the 50-50 profit-sharing after cost recovery that is contained in the controversial 2016 oil contract signed between ExxonMobil and the then APNU/AFC Coalition regime. (G-8)