Eight oil blocks attracted 14 offers from oil companies

Eight oil blocks attracted 14 offers from oil companies – VP Jagdeo

Sep 15, 2023 ExxonMobil, News, Oil & Gas

By Kiana Wilburg

Kaieteur News – In light of several external factors at play, as well as the new robust regime that has been established for the oil sector, Vice President, Dr. Bharrat Jagdeo said he considers the response for Guyana’s maiden oil blocks auction a “tremendous success.” The Vice President lauded the fact that six bidders submitted 14 offers for eight of the blocks. This is more than half of the 14 concessions that were up for grabs.

Vice-President – Dr. Bharrat Jagdeo

The companies that submitted bids include: Total Energies EP Guyana B.V, Qatar Energy International E&P LLC, & Petronas E&P Overseas Ventures SDN BHD (Malaysia); Delcorp Inc – Guyana, Watad Energy, Arabian Drillers (Saudia Arabia); Exxon Mobil Guyana Limited, HESS New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited; Liberty Petroleum Corporation (USA) and , Cybele Energy Limited (Ghana); Sispro Inc. (Guyana); and lastly International Group Investment Inc. (Guyana), in joint venture with Montego Energy SA (London).

The Vice President did not state which companies made bids for certain blocks. Be that as it may, the official said, “We are very pleased with the offers that we had from the bid round (which closed September 12, 2023). The blocks that we did not receive bids for are D3, S1, S2, S6, S9, and S11. So that means some of the blocks are very competitive. A number of people are questioning whether this was a successful bid round or not but we are pleased with how the round has gone.”

He said the government is satisfied with the outcome, especially since the auction was held after the modernization of the legislative and regulatory framework. The chief policy maker for Guyana’s oil sector was pleased with the fact that authorities kept its promise to not conclude the bid round without new model Production Sharing Agreements (PSAs) in place to govern deepwater and shallow water blocks. He also lauded the passage of the Petroleum Activities Law.

With a more robust regime in place, Jagdeo said one needs to appreciate the global context within which the new system was implemented. He said, “Globally, we have a move now to net zero with all of its attendant consequences, the key one being the de-carbonization of many activities from the oil majors. In fact, many of them have been selling off of their assets in exploration in many parts of the world. Then there is the inability to raise financing for activities related to the fossil fuel industry.”

Blocks in red received 14 bids from six groups of companies

He also noted that while most countries have detailed seismic studies and would undertake to do that exercise in hopes of attracting more companies, Guyana did not. Another critical factor he said is that several countries were also hosting their bid rounds for oil blocks too, thereby making the environment more competitive.

With those external factors in play, along with the fact that Guyana has a more stringent fiscal regime that demands the payment of a 10 percent royalty and signing bonuses, Jagdeo said the interest for eight of the 14 blocks on offer was commendable. He said the next stage is for authorities to review the bids received, following which, more details would be released. Jagdeo also anticipates that awards will be made before the year’s end.

The Vice President shared that one of the key lessons government has taken from this maiden auction, is that resources for investment in this particular sector do not come by easily. He said it is a reminder that Guyana is competing with other countries that have great prospects as well and they are prepared to have those investments go to them by lowering the government’s take.

Be that as it may, the Vice President remained confident, believing that the government’s strategic vision for the oil sector—bolstered by robust environmental safeguards—will undoubtedly secure its leading position in the global arena.