Remaining oil blocks, Exxon’s relinquished areas to be available for bilateral deals – VP

…says no agreements signed so far

Having decided not to pursue setting up a national oil company in Guyana, Government is turning to its bilateral partners to develop the remaining oil blocks offshore that were not included in the current auction along with the areas that will be relinquished next year by ExxonMobil in the Stabroek Block.
This was indicated by Vice President Bharrat Jagdeo during a press conference on Friday.

“…We were exploring whether we would utilise all the areas

offshore through a national oil company or we will go to auction. We decided at this stage that we’re not going to establish a national oil company and we went out to auction for 14 areas,” the Vice President stated.
He went on to point out, however, that there are several areas remaining offshore that were not put up to be auctioned off in the current exercise.
“Those areas will be available for bilateral engagements. We then have, sometime next year, the relinquishment of 20 per cent of the Stabroek Block and those areas would be available also for bilateral [engagements] and possibly, if the bilateral agreements don’t yield the results that we hope they would yield, they would also be available for auction,” Jagdeo noted.
According to the Vice President, Government is yet to decide whether the entire 20 per cent relinquished Stabroek Block areas will be used for those bilateral deals.
“So, we’ve made no definitive decision on the 20 per cent being relinquished that those would be all available for bilateral engagements or auction, although, they are potentially available for discussions at the bilateral level. And that is what we spoke of in India and we’ve also indicated that to several other governments that are interested in participating at a bilateral level with us because we believe that some bilateral engagements could complement the more commercial type engagement with the private sector that we’re getting through the auction,” VP Jagdeo posited.
The Vice President, who recently returned from a trip to India, also revealed on Friday that Guyana will soon be signing a Memorandum of Understanding (MoU) with the Asian nation to collaborate in the area of oil and gas. This is likely to be inked during the upcoming visit of the Indian External Affairs Minister, Dr Subrahmanyam Jaishankar.
Among the potential areas for bilateral cooperation between the two countries under the agreement are the sale of crude oil to India as well as development of oil blocks offshore Guyana. However, Jagdeo was quick to outline on Friday that no agreement on any bilateral engagement has been signed, with any governments as yet.
In addition to India’s long-standing interest in Guyana’s petroleum sector, several other governments around the world have also indicated their intention to develop the local oil resources. The Governments of Trinidad and Tobago, the United Kingdom (UK), Qatar and the United Arab Emirates (UAE) are all interested in Guyana’s oil blocks.
The Guyana Government launched the current oil block auction in December 2022, putting 14 areas offshore up for grabs – 11 in the shallow area and three in the deep-sea area.
Last month, Natural Resources Minister Vickram Bharrat disclosed that more than 20 renowned oil and gas companies have indicated their interest in buying oil blocks and have already submitted bids. He had also indicated that given the overwhelming interest in the auction, Government is mulling an extension of the April deadline for submissions of bids.
“A lot of companies have been making requests to us to have an extension, because they have to prepare their proposal to send to us so that we may consider, however, it stands at April for now,” Bharrat had explained.
The sizes of the 14 oil blocks on auction range from 1000 to 3000 square kilometres (sq. km.). As it is, the competitive bidding round will be open until April 14, 2023, after which evaluations and negotiations will follow. Government had set a timeline for awards for May 2023.
In preparation for that process, the Guyana Government is currently finalising the terms and conditions of a new Production Sharing Agreement [PSA].
“We have an international consultant from the US that is working on that and it should be finalised very shortly… We should have a few persons coming into the country from that team to work with our technical team to finalise the PSA,” Bharrat also indicated last month.
Under new conditions, Guyana stands to benefit from as 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 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 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, US oil giant ExxonMobil, which operates the oil-rich Stabroek Block with its co-venturers, had said that it was awaiting the final terms of the new PSA before it makes a decision on bidding for the oil blocks that are presently up for auction.
ExxonMobil Guyana President Alistair Routledge told <<<Guyana Times>>> last month that his company’s interest in the auction is fuelled by its successful oil finds offshore Guyana.
“Well, we’re always interested in new acreage. And clearly where we’ve had some success, that, you know, brings a certain degree of interest and we should be knowledgeable of it… We’re taking a look at some of the data [from] the Government that they provide [on] what’s available. We’re awaiting the final terms for the new PSC (Production Sharing Contract). And when we have all of that together, then we’ll be in a position to make a decision on whether or not we bid and what we bid for,” he explained during a media briefing in February.
Currently, the 2016 oil contract for the Stabroek Block signed between ExxonMobil and the previous APNU/AFC Government pegs cost recovery at 75 per cent. The remaining 25 per cent of revenues is spilt 50/50 between the Government and the co-venturers, while the country also gets a two per cent royalty from total revenues.
Meanwhile, in addition to ExxonMobil’s pending relinquishment next year, it was recently announced by Canada-based CGX Energy Inc that it is in the process of relinquishing 25 per cent of its interest in the Corentyne Block, which it operates offshore Guyana with its majority Canadian partner, Frontera Energy Corporation.
In June last year, the Canadian operators had relinquished two exploration blocks offshore Guyana – the Berbice and Demerara oil blocks – and that process was completed between February 3 and 27, 2023, through mutual termination agreements with the Government of Guyana. (G8)