Last Updated on Thursday, 31 August 2023, 17:12 by Denis Chabrol
The Guyana government would be approving United Kingdom oil company, Tullow’s sale of 60 percent stake in the Orinduik Block to the Toronto-headquartered Eco Atlantic (Oil and Gas) Limited, Guyana’s Vice President Bharrat Jagdeo announced on Thursday.
While Tullow had announced on August 11, 2023 that it was selling its share in the Orinduik Block for an estimated US$700,000, that deal was subject to regulatory approval.
“We’ve in principle agreed that the approval will be given for Tullow to sell its share to Eco and to exit that Block,” he told a news conference.
Touching on the Kanuku Block, Mr Jagdeo said a letter was dispatched to the government in May, 2023 requesting a new prospecting licence. Noting that not many persons had been aware of that letter, he said in reality the property was returned to the Guyana government after the expiration of the 10-year licence.
Vice President Jagdeo said if a policy decision is made to consider favourably the application for a new prospecting licence, the company would now have to comply with provisions of the new Production Sharing Agreement. They include a reduction of the size of the block, a signing bonus, increased royalty and other new fiscal conditions.
“If you decide to renew the prospecting license, they would also have to have a very aggressive development plan because that’s part of the competition to have an aggressive exploration programme,” said Mr Jagdeo, Guyana’s chief policymaker on the oil and gas sector.
With Tullow having already spent US$500 million on drilling three exploration wells and conducting 3D seismic surveys for the entire Kanuku Block, he noted that if the company walks away, it would lose all of the money it had invested because it has not moved on to production. “The government of Guyana or the people don’t have to pay back for that because the exploration activity is done at the risk of the investor,” he said.
At the same time, he was wary that negotiating with Tullow could undermine the auction and 0ther companies “may want to come through that route too and we may not get the best deal out of an aggressive exploration plan.” On the other hand, he said government would have to consider the company’s experience of the company in that block, he added.
If approved, Mr Jagdeo said Tullow would still be part of Kanuku Block should get a renewed licence. although it has exited the Orinduik Block.