Guyana is moving full steam ahead to award more oil concessions, but this time it would be done through a competitive system instead of striking one-on-one deals, Head of the Ministry of the Presidency’s Department of Energy, Dr. Mark Bynoe announced Monday.
“This is likely to be a bid round” Bynoe told a press conference he shared with British oil and gas Advisor, Matthew Wilks.
Bynoe said that his Department completed the development of its best practice Production Sharing Agreement (PSA) template last December and it would be used when the new licensing begins and onward.
He explained that since there are varying exploration shelf conditions here, new PSAs would not be a one-size-fits-all but each catering to get the best deal for both country and investor. “This is going to be used in new licencing rounds going forward. Let me emphasize, it’s a template, meaning that we will vary differing conditions depending on how we are engaging,” he said. “It will always be a balancing act on what Guyana wants and how Guyana perceives to get what Guyana wants” said Bynoe, who is a Resource Economist.
Wilks, who is a veteran oil and gas expert having served in several other countries and multinational companies, said the new PSAs would take into account the investment conditions. “If you are investing in deep water with all the risks that that takes, that would be a different investment climate to investing offshore and the same for the near shore. So you could very well have three subtly different PSC [Production Sharing Contract] structures for different investment environments,” Wilks explained.
Wilks underscored that the PSAs would be modelled to ensure both government and investors get what they want.
The Head of the Department of Energy said that nearly all global oil majors have signaled interest in Guyana’s lone remaining ultra deep water block, referred to as Block C, but the department would not go to a new licencing round with current archaic oil legislation or the current PSA template that was used for ExxonMobil, Repsol, CGX Energy and others. To this end, it is currently undergoing a legal review and gap analysis of existing legislation and the completion of that should be done by the end of this month.
“The 1986 Act is not fit for 2019. It is silent on gas…,” said Bynoe. He added that, “one of the things we hope to achieve is… a legal review, and gap analysis of existing legislation is expected by February 2019. The primary legislation of 1986 may have been suited for that time,” he added.
And as it works to make the shallow continental shelf attractive to investors, the Department of Energy would be conducting a seismic survey of the area by undertaking “A multi-client survey for data packages to encourage greater interest in the shallow continental shelf,” Bynoe said.
He emphasised that the firm to conduct the survey would be publicly tendered.
ExxonMobil recently announced the discovery of its 12th deep water well in the Stabroek Block more than 100 miles offshore Guyana.
Guyana is expected to begin commercial oil production in late 2019 or early 2020 at a rate of 120,000 barrels per day and soaring gradually to more than 750,000 barrels per day by 2025 as more wells are discovered to production stages.