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VP Jagdeo open to Guyanese participation in upcoming oil blocks auction
Kaieteur News – As government authorities continue to iron out a number of variables for the nation’s first oil blocks auction now slated for year-end, Vice President, Dr. Bharrat Jagdeo said he is not opposed to locals being part of the process.
Vice President, Dr. Bharrat Jagdeo
During a press conference held at the Arthur Chung Conference Centre (ACCC) on Friday, Dr. Jagdeo said the involvement of locals is a very important point for the State to consider. He was keen to remind, however, that Kaieteur News was at the forefront of criticisms against locals who were able to access the Kaieteur and Canje oil blocks in 2015.
The initial owners for Kaieteur Block, Ratio Energy Limited (renamed Cataleya Energy) and Ratio Guyana Limited subsequently sold majority interest to ExxonMobil Corporation’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL). The owner of the Canje Block, Mid-Atlantic Oil and Gas Inc. would follow the same path. Criticisms from stakeholders locally and abroad were centred on the fact that the companies in question had no experience in deepwater exploration or the wherewithal for the exploration activities needed to be carried out for the blocks but they were nonetheless awarded the offshore concessions.
If the auction is open to Guyanese, Jagdeo said he anticipates criticism that the government is allowing a few people to enrich themselves. If locals are excluded, the Vice President said there could be concerns that Guyanese are not being given the opportunity to grow their knowledge in terms of being leaders in the upstream industry. Meanwhile, foreign entities are being allowed to exploit the resources. He said a debate on the pros and cons of Guyanese participation would be of particular interest.
Should locals be involved in the auction, he said there would have to be an examination of how to avoid the blocks landing in the hands of Exxon and other players since the intention of the bid round is to also avoid more concentration of the nation’s offshore assets with those companies.
His personal position is that a consortium of Guyanese could be given a chance to prove that they can get the capital, give the country better fiscal terms and make a profit for themselves.
As to the timeline for the auction, he said this has been moved from the September deadline to year end, as they are a number of matters that are still under consideration.
The Vice President said, “We have all of the areas potentially that we are gonna put out to auction. We have 3D seismic for some areas; we have 2D seismic for some areas and we have no data for some areas. Before the end of August, we have to make a determination on whether we will pursue the strategic partnership idea or whether we will put out everything to auction or do a combination of both. Also, we have to decide on the blocks – how we want to split these potential areas and what size these blocks should be so we are going to get technical advice on that.”
Dr. Jagdeo added, “We also have to make a decision on whether we will allow existing oil companies in Guyana, particularly ExxonMobil, to participate in the auction and if so, will there be a limit to the number of blocks one person could have or not. We have to also work swiftly – and this is where we may have some delay because we now need to determine the fiscal terms for the new prospecting licences and this brings me to that very, very contentious issue that we have had in the public domain, which is the fairness of the contract and what the future take for Guyana will be.”
The Vice President said the government is trying to put all of this together into a framework that is fair to the investor, so that they get a decent return on their capital while also promoting accelerated exploration.
The decision on the foregoing is expected this month.
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