Guyana has secured a US$15 million signing bonus in an oil deal with a new group of companies.
The Guyana government issued the offshore block S4 to oil major TotalEnergies during a brief ceremony at Pegasus Corporate Center on Tuesday morning.
TotalEnergies will embark on studies and exploration work in the block, in partnership with Malaysia’s Petronas and Qatar Energy.
“We have five years to do it. We heard you very well about the penalties,” TotalEnergies’ Vice President, Exploration (Americas), Daniel Larranaga said.
Legal Officer at the Ministry of Natural Resources, Michael Munroe, gave a brief presentation, outlining the basics of the petroleum agreement which, among other things, will seek to stringently ensure the group’s obligations are met.
Minister of Natural Resources Vickram Bharrat said, “Every investor that comes to our shore and signs an agreement with us, they are of the understanding that this partnership will have to be a win-win partnership.”
The fiscal terms dictate that if the consortium moves to produce oil and/or gas, they would abide by a 10% royalty rate, a 65% cost recovery ceiling on annual production, a 50/50 profit split, and a 10% corporate tax. The new terms effectively give Guyana a share of 27.5% of initial production, plus corporate tax.
It is a notable increase from the 14.5% share which applies to Exxon’s Stabroek Block, where effectively no corporate tax is applied.
While Exxon paid a US$18 million signing bonus, this was for a block that had already yielded a commercial discovery. In this case, TotalEnergies’ block has not yet yielded a commercial discovery.
