Jun 29, 2022 News
…tells oil summit Guyana’s approach is to produce as fast as possible
By Gary Eleazar
Kaieteur News – Guyana’s President Irfaan Ali, is in neighbouring Suriname where that country is hosting a three-day Energy and Oil Summit, where he informed participants of the country’s decision to auction its available oil blocks and used the occasion to encourage local business interests to organise themselves into consortiums to take advantage of the opportunities.
With this in mind, he told participants “we have taken an approach in Guyana to get to production as fast as possible.”
To this end, he reminded, “the reality is the world is trying to get out of production as fast as possible, so if you want to maximise the timelines for the benefit of the resource, it’s a very simple analysis, you have to get to production as fast as possible.”
With this in mind, the Guyanese President said, “I want to assure the potential investors, industry specialists, that our approach will be a very open and transparent approach; whichever direction we go will be announced publicly, will be detailed publicly and all will be invited.”
To this end, he used the opportunity to point out that this was open to locals that would want to form themselves into consortiums, “because we have seen the value of consortiums.”
Qualifying his position further, President Ali was adamant, ‘the scale of development requires a different scale of thinking not only from the government but from the private sector.”
According to President Ali, the private sector can come together, “bring their liquidity and capital together and go after some of these auctions.”
The President told participants that Guyana was looking to engage in a full auction of its remaining oil blocks.
Additionally, he reminded that, “we are also moving on an aggressive path to have those blocks that were allocated and not explored come back into the national fold so that they can also form part of the auction.”
Ali’s confirmation of a Kaieteur News’ report comes after this publication had caused to be published that based on a review of the respective Production Sharing Agreements (PSA), it was ascertained that there will be five contenders. They include relinquished portions of the Kanuku, Corentyne, Demerara, Canje and the Kaieteur Blocks.
Importantly, no part of the Stabroek Block would be included in nation’s maiden bid round since the provisions of the 2016 contract only allow for 20 percent of the acreage to be relinquished after seven years. It therefore means that a portion of the oil-rich block would only be surrendered to the State until 2023.
The Kanuku Block, which covers 1,937 km2 in the Atlantic Ocean within the Exclusive Economic Zone of Guyana, is operated by Repsol. The company gave up 20 percent of the block this year in which it holds a 37.5 percent stake and while Tullow holds 37.5 percent and TOQAP, a company jointly owned by Total E&P Guyana B.V. (60 percent) and Qatar Petroleum (40 percent), holds 25 percent.
The Corentyne and Demerara Blocks are operated by Canadian explorers, CGX Energy Inc. and Frontera Energy Corporation.
An independent Prospective Resource study of the two concessions by McDaniel and Associates Consultants Limited, noted that the concessions hold a combined median estimate of 4.84 billion oil-equivalent barrels. CGX has successfully relinquished parts of the Demerara and Corentyne Blocks to the State.
Like Stabroek, the Kaieteur and Canje oil blocks are operated by ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL). In the case of Kaieteur, 25 percent had to be relinquished since February 2021. This is yet to occur.
As for Canje, 20 percent was relinquished in 2019.
In the Canje Block, EEPGL holds a 35 percent interest. The remaining partners are: Total Energies E&P Guyana with a 35 percent stake, JHI Associates with 17.5 percent and Mid-Atlantic Oil & Gas with 12.5 percent.
In Kaieteur, Esso has 35 percent working interest, Hess Corporation holds 20 percent, Ratio Guyana Ltd. has (25 percent), and Cataleya Energy Ltd.
In the meantime, industry analysts such as ABIS energy which has been involved in following Guyana’s oil story since 2018, have said via a report that the basin is highly likely to witness farm-ins and merger and acquisition (M&A) activities over the next five years.
The report said these will be driven on the one hand by operator cost reduction considerations and on the other by the inability of smaller independents like Eco Atlantic to raise the necessary financing to carry out or meet their contractual work obligations or requirements.
The report concluded that given the largely deep and ultra-deepwater nature of Guyana’s most prospective exploration areas, any such M&A activities are likely to favour the major companies with the deep pockets necessary to carry out extensive exploration activities.
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