Govt assessing “strategic partner” model for national oil company ahead of oil block auction

Aug 19, 2022 News

Kaieteur News – President Irfaan Ali has said that his administration is still looking at the business model to allow a strategic partner to operate and manage the country’s potential oil company ahead of the upcoming oil block auction which was scheduled for next month, but has now been pushed back toward the end of the year.

President Irfaan Ali

The Government had set September for the offshore oil blocks to be auctioned to interested parties, but President Ali has said that feedback on this is still coming in, and the auction will be held after all information is considered.

Vice President Bharrat Jagdeo, with responsibility for the country’s budding oil sector, had stated earlier this year that the administration is considering the development of a national oil company (NOC) with the Government playing a passive role by owning shares in the company, and not taking part in its management activities. The “strategic partner” which the Government seeks, will also take shares and operate the company on behalf of Guyana. The decision on this matter was set around the same time the blocks would have been auctioned.

The President has noted however, that since the announcement of the specific model, several expressions of interest have been received by the Government. The Head of State said that the Government has publicly indicated what type of partnership they are looking for and has asked potential investors from places such as the United States, “to give us an option of whether they would like to partner or find a strategic partner in terms of the energy security in the region…” The President explained that one of the models he believes will benefit Guyana is a model in which some blocks can be developed through a state company. He continued however, that a state oil company is different, “one in which the Government does not have management interest or does not play any part in managing, nor do we put any investment in, but where Guyanese people are part of what comes out of the returns.”“So, that model has been attracting a lot of attention and I’ve been getting a lot of feedback, a lot of ideas from different places,” the President informed.

He said he wants to give himself “enough opportunity to get the total feedback on the model, because if we (Government) go to an auction and we auction out everything, then we lose the ability to come back with a model like this. So, for this model to work, it requires me getting all the feedback which I am getting.” The President said that he is getting a lot of technical feedback from different stakeholders and submitted that the Government will wait a bit more to see what other advise comes out in terms of the NOC model. “And then, when I am able to evaluate it all, then we can say it doesn’t make any sense or it makes sense to have a second model.” The Guyanese leader informed that while the current situation has delayed next month’s event, “the commitment to the auction is fully there.”

When considering the NOC with a “strategic investor” verses the auctioning of offshore oil blocks to interested parties, one of the main variables to be determined is whether Guyana will be able to significantly increase its revenue from other streams such as its Production Sharing Agreement (PSA).

VP Jagdeo during a press conference had submitted that there seemed to be a lot more cons and a few pros when examining existing NOC models. As such, he said that the state is considering a NOC with a model outside of the ordinary set-up. Key questions about the benefits of setting up an NOC include the time it would take to develop a NOC and have it running efficiently, the overload on domestic capacity, and the corruption usually associated with these entities.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News