Oil & gas sector: India interested in providing technical assistance to Guyana – Bharrat

…could help to build capacity in crude marketing, other areas

While Indian companies are interested in the ongoing bid round for Guyana’s offshore oil blocks, this is not the only oil and gas area that has peaked India’s interest. It turns out that providing technical assistance to Guyana for its oil and gas sector are also among the plethora of areas for bilateral cooperation that have been discussed with India.

According to Natural Resources Minister Vickram Bharrat in an exclusive interview with this publication, Indian companies have already been encouraged to submit bids for the ongoing bid round which comes to an end in July. Talks have also been had that focused on capacity building, in areas that include crude marketing.
“What will happen is that the Indian companies, for example the Indian oil companies, they’re interested in the bid round. So, we’ve encouraged them to submit their proposal to be a part of that process. So that was one of the major discussions. Aside from that, we’re looking at other areas that haven’t been finalized.”
“Areas of capacity building, technical cooperation, having experts assist us. Basically, those areas. They’ve been in this sector for a while now. And they have that technical capability to assist us in terms of our offshore capabilities. Crude marketing. And different aspects of managing the sector generally,” Bharrat said.
Indian External Affairs Minister, Dr Subrahmanyam Jaishankar recently undertook a three-day visit to Guyana. During that visit, he visited Indian funded projects and also held meetings with President Dr. Irfaan Ali and senior members of the government.
India has previously expressed an interest in purchasing Guyana’s crude on a long-term basis. In fact, earlier this year Guyana received an initial proposal for long term purchase of oil. Additionally, HPCL-Mittal Energy Ltd (HMEL), a joint venture between State-run Hindustan Petroleum Corp and Indian steel tycoon LN Mittal, has also bought crude directly from Guyana.
Last month, amid a plethora of interest being expressed by major international players, the People’s Progressive Party/Civic (PPP/C) Government had taken the decision to 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 had 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 modernizing 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 had 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.”
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 fueled 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)