Mar 01, 2021 News
By Mikaila Prince
Kaieteur News- Governments around the world make big money when they award oil and gas contracts by open, competitive bidding processes. And that is the route the Surinamese government took when it announced in November 2020 that it has eight oil blocks up for auction.
The eight blocks on offer total over 13,524 km2 of unexplored, but “highly prospective” acreage in the Guyana-Suriname basin. This is the same basin where ExxonMobil and its consortium of oil companies have made 18 discoveries, totaling to in excess of nine billion oil equivalent barrels.
When asked to give some insight on the bidding process, Rudolf Elias, the Chief Executive Officer of Suriname’s state oil company, Staatsolie, revealed that it gives preference to those oil companies that propose to make it an operator in 10 year’s time.
Elias had shared these and other details during his debut on the Kaieteur Radio programme, Guyana’s Oil & You, on February 4, last.
There, the CEO boasted that despite Staatsolie’s strict, fixed collections such as its 6% royalty, and 36% revenue collections and its 20% participating interest, the state oil company has seen a “huge interest” from international oil companies looking to secure the eight blocks.
Further, Elias pointed that oil companies would have to handle all exploration costs, while Staatsolie only jumps in when it comes to the developmental phase of the project. This provision is unlike Guyana, which handles all costs oil companies, including exploration, developmental and production costs
“But what we said this time,” the CEO explained, “because it is not in our deep, deep water, but it is between water that is zero and five meters and 75 meters, you can work with a jack up. But we said we will also add a lot of value towards the company that will teach us how to become an operator in the oil field in the offshore business, in the shallow offshore.”
He went on to add, “So, they [oil companies] get all the data that we have. They should come up [with] the programme and if a company comes up with a programme and says that [it] will drill two wells in the coming two years and we will get you to be operator in ten years, [and] we will build your capacity, then they will be the ones that get the block. This is more or less how we will do that.”
Capitalizing even further on its opportunities, Staatsolie has been studying a large shallow water acreage offshore Suriname, for which it has amassed a wealth of data. On its website, the state-run oil company explained how its work in the near shore areas. Though not yielding material discoveries, it has already done enough to confirm the “potential” of oil in the coastal area.
Kaieteur News had reported on how data amassed about certain areas could increase the value of the acreage. It is for the same reason that Guyana has been urged by industry experts to ensure it publishes data on relinquished blocks as soon as possible.
Impressively, Suriname could rake in hundreds of millions of dollars in signing bonuses for the shallow water block(s). It has already started to do so for its blocks since ExxonMobil’s continued de-risking of the Guyana-Suriname basin.
For instance, Total agreed to pay Apache US$100M for a 50 percent stake in the 1.4 million acre Block 58. That amounts to more than five times the paltry US$18M Guyana took from ExxonMobil for the 6.6 million acre Stabroek Block.
As has been reported in Kaieteur News, the Donald Ramotar administration had ignored the Guyana Geology and Mines Commission (GGMC) when the regulator advised that the government could facilitate competitive bidding acquiring Guyana’s oil block ‘C’, after at least four oil companies had shown interest in the area. Two of the interested companies were Repsol from Spain, and Royal Dutch Shell from the Netherlands, both major international players in oil and gas, as announced by a source.
Many have criticized Guyana’s contract with ExxonMobil as lopsided and unfair to the people of Guyana. Global Witness had even calculated that the poor terms would cause the country to lose US$55B over the life of the contract. It has criticized Guyana’s leaders for the part they played in the signing away of the massive concession to the multinationals, ExxonMobil, Hess and CNOOC.
Despite facing international and local condemnation, neither of the major parties has shown interest in securing better terms for the people. ExxonMobil has even boasted that it has received assurances from the parties that the contract will remain intact, and that its projects will be allowed to move forward.
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