Home Letters PSA for oil & gas exploration and development
It is a standard practice in some parts of the world like many fiscal regimes in the Middle East and African oil-producing countries to divide the periods of the Production Sharing Agreement (PSA) into stages: (1) Exploration phase that is most likely divided by two periods; first being exploration period of prospecting and, a second exploration period with each having specific minimum exploration obligations and expenditures which must be conducted within a specified timeframe. Accordingly, each exploration period takes about 2-3 years that can be extended from 6 months to 2 years.
And, (2) Development phase towards production – commencing of the first commercial discovery of oil and gas which continues for a period of 20 years and can be extended by up to 5 years.
This means that exploration, field development and production are all tied together by a two-prong contractual agreement. A PSA model of this nature should give the resource-rich countries ample time to ensure that all necessary conditions and measures (having an up-to-date Petroleum Act, Environment Law and Policy, Depletion Policy, Local Content Policy) are in place in the interests of the contractors (Multi-companies) and host oil-producing countries.
In Guyana’s context, such a PSA model would have been an ideal prerequisite for its oil and gas industry.
As such, the Guyanese people should be rightly informed by the PNC-APNU/AFC Opposition of the PSA model used for Guyana’s oil and gas; exploration, field development and production and, who are the political directorates responsible as the true initiator and arbitrator of the 2016 ExxonMobil-Guyana PSA.