Latest update November 15th, 2024 1:00 AM
Guyana eyes US$10M signing bonus for 11 new oil blocks up for auction
…European, Middle Eastern countries already submit tenders – Ministry’s Brief
Kaieteur News – The Guyana Government is gearing to auction 14 oil blocks in Guyana’s Exclusive Economic Zone (EEZ), 11 in the shallow waters and three in the ultra-deep waters.
In presenting aspects of the new fiscal regime being used as part of the process, the Ministry of Natural Resources has confirmed that it is seeking a Signing Bonus of US$10M for each of the oil blocks being offered in the shallow waters—south of the Stabroek Block. With regard to the three blocks in the ultra-deep waters, the Ministry noted that it would be seeking US$20M Signing Bonus for each of those blocks identified, north of the Stabroek block and east of the Kaieteur and Canjie Oil Blocks.
This information is contained in the Ministry of Natural Resources’ Guyana Energy Brief 2023, prepared in conjunction with the Guyana Geology and Mines Commission (GGMC). In that document it was noted that the government in November last, launched the 2022 Guyana Licensing Round with fourteen 14 oil blocks up for tender – three located in the ultra-deepwater and the remaining 11 in the shallow water. The competitive bid round was open to all local, regional and international energy players and according to the Ministry, “already, oil majors operating out of Europe, the Middle East and South America have tendered their interest in securing oil blocks which range from acreages of 1,000 square kilometres to 3,000 square kilometres.”
“Although both international and local companies will be given an opportunity to bid for blocks, they must, however, possess a proven track record of technical, financial, health and safety, and environmental capabilities.”
The Blocks identified for auction by tender as identified by the Ministry of Natural Resources and GGMC
Bidders, the Ministry said, will be assessed based on their guaranteed work programmes which will be weighed with the offered signing bonus and that local content commitments will also be fully examined.
Additionally, while there will be no restrictions on how many bids a company may submit, each successful bidder will be limited to an award of three blocks. “This licensing round gives qualified international and local companies the opportunity to tap a country whose hydrocarbon potential places it among the top-five non-OPEC (Oil Producing and Exporting Countries) countries set to lead as global producers by 2030.” This licensing round comes to a close in April 2023 with the expectation for the new model Production Sharing Agreement (PSA) to be applicable for awards by the end of the first half of this year, the Ministry said.
It was observed, in the Energy Brief, that as the guiding terms for the 2022 licensing round, the government has identified, too, a new and enhanced fiscal framework.
This structure, the Ministry indicates, will form the basis for a draft new model PSA that is scheduled to be released by the end of this Month. Addressing some of the key changes on the new PSA, it noted that royalty has been increased to 10 percent.
“The current 75 percent cost recovery ceiling has been lowered to 65 percent. Profit sharing after cost recovery remains the currently applied 50/50 system between the contractor and the Government of Guyana.” According to the government, these new terms “have increased Guyana’s profit share from 14.5 percent to 27.5 percent, plus the newly introduced 10 percent tax.” According to Natural Resources Minister, Vickram Bharrat, “these changes come on the heels of reviewing the licensing models of global oil producers, complemented by the advice of industry experts.” He said, “These incentives are expected to attract major international oil companies with the necessary finance and expertise to expedite the prospecting and development.”
- Guyana, Guyana Geology and Mines Commission (GGMC), Guyana’s Exclusive Economic Zone (EEZ), Ministry of Natural Resources, Stabroek Block
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