The Government of Guyana is yet to conclude negotiations with the companies that won oil blocks in the 2022 Licensing Round. Vice President, Dr. Bharrat Jagdeo disclosed this information during his weekly press conference today.
The government had expressed optimism that successful negotiations which started in November will lead to the awarding of blocks, contingent upon the companies’ ability to pay the stipulated signing bonuses.
Exploration licenses for shallow-water blocks require a minimum of US$10 million, while deep-water blocks necessitate a minimum of US$20 million.
Among the awarded companies were Guyanese woman-led company SISPRO INC (Guyana) for S3 and D2 Blocks; Total Energies EP Guyana BV, Qatar Energy International E&P LLC, Petronas E&P Overseas Ventures SDN BHD (Malaysia) for S4 Block; International Group Investment Inc for S5 and S10 Blocks; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited for S7 Block; Exxon, Hess and CNOOC for S8 Block; and Delcorp Inc Guyana, comprising Watad Energy and Communications Limited & Arabian Drillers of Saudi Arabia for the D1 Block.
President Irfaan Ali initially announced the Licensing Round in December 2022, making it Guyana’s inaugural auction. After several extensions and updates to the fiscal framework, the auction concluded with six bidders submitting 14 offers for eight of the 14 oil blocks offshore Guyana.
Noteworthy is that the new Production Sharing Agreement (PSA) and fiscal terms are expected to remain largely unchanged, with potential minor adjustments during negotiations.
Under the new PSA, Guyana stands to gain significant benefits, including the US$20 million signature bonus for deep-water blocks and US$10 million for shallow-water blocks. Other terms include a fixed 10% royalty rate, a 10% corporate tax, and a reduced cost recovery ceiling of 65%, down from the previous 75%.
As the government enters negotiations with the awarded companies, the critical phase will involve establishing terms and conditions governing the exploitation of these oil blocks. This phase is pivotal for ensuring effective collaboration between the government and companies to mutually benefit from harnessing Guyana’s oil resources.
Jagdeo emphasized the importance of verifying the companies’ financial resources to fulfill commitments, particularly the signing bonuses, which represent a substantial financial commitment crucial for advancing oil exploration and production projects in Guyana.