Govt. seals oil block deal with Qatari group

May 27, 2024 News

…negotiations with other bidders still ongoing- Jagdeo

Kaieteur News – The Government of Guyana (GoG) has approved one bid to date from its maiden oil blocks auction. Block S4, a shallow water portion, has been awarded to TotalEnergies EP Guyana B.V. in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas SDN BHD.

Vice President, Bharrat Jagdeo

This was recently announced by Vice President Bharrat Jagdeo during his weekly media engagement. The former Head of State explained, “That has cleared the Cabinet already and it’s moving forward…most of the others, they are still in discussion on the PSA (Production Sharing Agreement) because a lot of them have either issues with the PSA, the legal terms.”

Blocks in red received bids during the maiden auction

Jagdeo reminded that the fiscal terms of the new oil contract were simply non-negotiable; however, bidders have also complained about the other obligations being too “rigid”. On the other hand, he noted, “Some are still looking for partners and operators because the original submission, they couldn’t conclude those, so unless those issues are dealt with beforehand in the negotiations, it’s not gonna go to Cabinet to make the final thing, only when we are sure then we take it to the Cabinet and the one that went to the Cabinet was the one with Qatar…”

The Vice President said he could not say at what stage the oil company was with regards to the routine process and asked that further questions be directed to the Minister of Natural Resources, Vickram Bharrat.

Guyana’s maiden auction launched in December 2022 featured 14 blocks but only eight received bids. Previously, VP Jagdeo explained that Cabinet approved several companies to be awarded various blocks. ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited was approved for shallow water block –S8.

Out of Nigeria, International Group Investment Inc. was found eligible for two shallow water concessions—S5 and S10. An American and Ghanian partnership, Liberty Petroleum Corporation and Cybele Energy Limited, was approved for shallow water block—S7. Delcorp Incorporated, a Guyanese company, in collaboration with Watad Energy and Communications Ltd and Arabian Drilling Company was approved for deepwater block titled—D1.

Meanwhile, a consortium led by four African-Guyanese women also secured two pivotal oil blocks in Guyana’s debut auction. Sispro Inc., was awarded a shallow water block called S3 and a deepwater block titled D2. Companies that will be awarded the new blocks will also have to agree to a new fiscal regime that requires the payment of a 10 percent royalty and a 10 percent corporate tax. The cost recovery ceiling will be capped at 65 percent in a given year, while profits will be shared 50/50 between companies and the state. In the meantime, Guyana’s oil-rich Stabroek Block, operated by ExxonMobil, requires a meagre 2% royalty, no taxes, 75% cost recovery ceiling each month which leaves 25% of profit to be shared with Guyana. Stakeholders had warned that the terms of the Exxon deal could deter investment since the new PSA now requires greater fiscal benefits for the country. This led to calls for new projects in the Stabroek Block to be subjected to these terms; however, the government remains adamant that seeking greater benefits could slow the pace of development and chase investors.

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Auction, Blocks, negotiations, oil, PSA, Qatar

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