Oil companies set to ink agreements to kick off exploration

Last Updated on Wednesday, 14 August 2024, 22:02 by Writer

The Ministry of Natural Resources, Duke Street, Kingston.

Ten months after Guyana’s first ever bid round yielded six companies for eight offshore oil blocks, government on Wednesday announced that negotiations have concluded and the companies were poised to sign the production sharing agreements (PSAs) and pay the signature bonuses.

The signature bonus would be US$10 million for shallow waters and US$20 million for deep waters. Natural Resources Minister, Vickram Bharrat said the companies were reviewing the agreements in preparation for signing.

He said the fiscal terms in the PSAs remained unchanged – 20% royalty, 10% tax, 65% cost recovery and 50-50 profit sharing – but mainly the smaller companies negotiated around the schedule for exploration.

He also attributed the delay partly due to the fact that the local companies were searching for the required support. “I know personally that it has taken longer than it should have but it is not totally the fault of the technical team at the ministry or anyone else but is mainly because we had to work with the bidders. Some of them, especially the locals, were looking for international partners, they were looking for investors, they were looking for operators so we had to work with them,” Mr Bharrat told a news conference. He said a few of the companies were ready but government did not want to do separate PSAs for each company.

Mr Bharrat defended government’s decision to issue the bid round in December 2022 with 2D seismic data, saying it would have taken 12 to 18 months to conduct advanced seismic studies.

Noting that there are “limited major players” in the hydrocarbon sector that could drill in deep waters like ExxonMobil, he said competition at the time of Guyana’s bid round was high with similar auctions by Norway and neighbouring Suriname. “We had to take that into consideration that our exploration is done in ultra deep water – over 5,000 feet in depth – so it needs specialised drill equipment and technology,” he said.

The six companies are ExxonMobil Guyana Limited, Hess New Ventures and CNOOC Petroleum Guyana Limited, SISPRO Inc (Guyana), TotalEnergies EP Guyana BV, QatarEnergy International E&P LLC, Petronas (E&P) Overseas Ventures SDN BHD (Malaysia), Delcorp Inc Guyana, as well as the Saudi Arabia-based Watad Energy, and Arabian Drillers, Liberty Petroleum Corporation, Arizona United States, and the Ghana-headquartered Cybele Energy Limited (Ghana), and International Group Investment Inc and Montego Energy SA (London).

Those successful bidders were named in October 2023.