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Despite 10% royalty, payment of more taxes, Exxon-led Group still throws in bid for new oil blocks
Kaieteur News – Despite the Government of Guyana introducing a range of higher fiscal terms for contracts governing the award of new blocks, such as a 10 percent royalty and the payment of corporate and income taxes, an ExxonMobil – led consortium is listed among the bidders who are interested in the offshore blocks.
This was confirmed with Kaieteur News by a senior government official on Tuesday. This publication understands that bids for the oil blocks were opened yesterday at the National Procurement and Tender Administration Board (NPTAB) office, and ExxonMobil Guyana Limited, and its partners CNOOC and Hess Corporation, are among the list of bidders for the 14 oil blocks up for grabs. The government official also confirmed that only eight of the blocks attracted bids.
This publication had reported that President Irfaan Ali announced the commencement of Guyana’s inaugural bid round for 14 of its offshore oil blocks on December 9, 2022.
Initially, the auction was expected to run until April 14, 2023, with contracts signed the following month. Subsequently, the Ministry of Natural Resources announced in April 2023 that it has extended the period for submission of bids for the 14 oil blocks on auction.
Map showing the blocks part of the licensing round.
In a statement to the press, the Ministry of Natural Resources said, “On behalf of the Government of Guyana, (it) is pleased to announce the extension of the Guyana 2022 Licensing Round’s bid submission deadline to July 15, 2023.”
In July however, the government again announced that Guyana 2022 Licensing Round’s bid submission deadline had been pushed back to September 12, 2023.
In making that announcement, the government said in a statement that its continuous efforts to streamline and improve the petroleum regulatory framework, and the resultant comprehensive feedback received from stakeholders, led to this necessary extension.
Whilst recognising the new era of oil and gas development and investors’ confidence in economy, the government said it is working to ensure that this competitive licensing bid and future rounds are governed by a modern regulatory framework with improved technical and institutional capacities. Against this backdrop, the government said it will soon complement the model Production Sharing Agreements (PSAs) with a new Petroleum Activities Bill 2023, which will not only enhance the management of the sector but also provide improved economic measures for all licensees in the bidding round, as well as future development and production operations in Guyana’s petroleum sector.
It should be noted that the government has since passed the Petroleum Activities Law and has finalized the new Model Production Sharing Agreements that will govern future awards of deepwater and shallow water concessions.
Kaieteur News had reported that eleven of the oil blocks on auction are located in the shallow area and three are in the deep water zone. Each area is governed by separate PSAs. They range between 1000 square kilometres to 3000 square kilometres with the majority of them being close to 2000 square kilometres. The oil companies will be expected to pay a 10 percent royalty and a 10 percent corporate tax. The cost recovery will be capped at 65 percent in a given year, while profits will be shared 50/50 between the parties.
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