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Govt. now releases final PSAs
Minister of Natural Resources, Vickram Bharrat
Kaieteur News – The Ministry of Natural Resources (MNR) has finally published the final Production Sharing Agreements (PSA) that will govern the deepwater and shallow areas that were recently auctioned.
On Friday, the Ministry said the documents have been published on its Petroleum Management website, see links attached. https://petroleum.gov.gy/documents/ministry-natural-resources-model-production-sharing-agreement-deepwater-areas
The government’s failure to release the agreements had raised concerns among stakeholders in light of the lopsided terms included in the 2016 contract signed with ExxonMobil. That agreement was only released to the public two years after it was signed. It contains clauses that both sides of the political divide have condemned; however, the incumbent government maintains that there will be no renegotiation of the deal.
The model agreements were released in March of last year for the public to give their comments and recommendations. This was followed by a review period by the Ministry and subsequent implementation of certain recommendations.
Guyanese had called for mechanisms to be put in place for all comments on the draft agreements to be made public and for government to produce a plan to report on how public feedback was addressed in the development of the final model agreement; however, there was no response to those appeals.
Public queries directed to the Ministry on whether a statement or press conference will be issued or convened to inform of the changes to the document were not answered.
In the meantime, the government is still in the negotiations phase with the participants of the country’s first oil blocks auction.
Guyana had auctioned 14 oil blocks offshore but received eight bids from 14 petroleum companies. Launched in December 2022 by President Irfaan Ali, the auction was lauded a success by the administration.
Notably, 11 of the oil blocks auctioned are located in the shallow area and three are in the deepwater zone. 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. For shallow water blocks, companies have to pay a minimum of US$10 million while a minimum of US$20 million is set for deep water concessions. Government had said these fiscal terms were non-negotiable.
Following the release of the PSAs, Chartered Accountant and prominent Attorney-at-Law, Christopher Ram said major weaknesses in the old contract have been repeated.
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