New oil contract still to be released as Govt. continues negotiations with oil companies

Dec 31, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – The new Production Sharing Agreements (PSAs) to govern the deepwater and shallow areas that were recently auctioned is yet to be released by the Government of Guyana (GoG) even as the administration is locked in negotiations with oil companies that participated in the country’s inaugural bid round this year.

The Ministry of Natural Resources (MNR) officially released the PSAs to the public in March this year for a two-week comments period. This was followed by a review period by the Ministry and subsequent implementation of certain recommendations.

In August, MNR updated its website with the draft oil contracts but there is no sighting of the final agreements. The failure by government to release the final terms of the agreement would spark concerns given the lopsided contract signed with ExxonMobil in 2016. That agreement was only released to the public two years after it was signed.

This newspaper had made several attempts to access a copy of the final terms of the PSAs, but requests to the MNR were not met.

Natural Resources Minister, Vickram Bharrat

Vice President Bharrat Jagdeo had previously indicated that there will no changes to the fiscal terms of the model contracts seen by the public.

On Thursday during his year-end press conference at Freedom House, the General Secretary of the People’s Progressive Party informed that negotiations are still ongoing with the companies who participated in the country’s maiden bid round.

Guyana had auctioned 14 oil blocks offshore but received eight bids from 14 petroleum companies. Launched in December 2022 by President Irfaan Ali, the auction was lauded a success by the administration.

The draft Deepwater and Shallow Water PSAs are available on the Ministry of Natural Resources’ website

The companies that participated includes Total Energies EP Guyana B.V, Qatar Energy International E&P LLC, & Petronas E&P Overseas Ventures SDN BHD (Malaysia); Delcorp Inc – Guyana, Watad Energy, Arabian Drillers (Saudia Arabia); Exxon Mobil Guyana Limited, HESS New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited; Liberty Petroleum Corporation (USA) and , Cybele Energy Limited (Ghana); Sispro Inc. (Guyana); and lastly International Group Investment Inc. (Guyana), in joint venture with Montego Energy  SA (London).

Notably, 11 of the oil blocks auctioned are located in the shallow area and three are in the deepwater zone. They range between 1000 square kilometres to 3000 square kilometres with the majority of them being close to 2000 square kilometres. Government has not yet disclosed the details of the bids submitted but pledged to do so after careful evaluation of those documents.

Winners of the new blocks will be expected to pay a 10 percent royalty and a 10 percent corporate tax. The cost recovery will be capped at 65 percent in a given year, while profits will be shared 50/50 between the parties. For shallow water blocks, companies have to pay a minimum of US$10 million while a minimum of US$20 million is set for deep water concessions.

Guyanese had called for mechanisms to be put in place for all comments on the new draft agreements to be made public and for government to produce a plan to report on how public feedback was addressed in the development of the final model agreement.

This suggestion was not taken on board and Guyanese are still clueless as to what changes have been made to the PSAs.

Chartered Accountant and prominent Attorney-at-Law, Christopher Ram following the release of the PSAs said major weaknesses in the old contract have been repeated.

• Minister of Natural Resources, Oil blocks, PSA, Release, terms, Vickram Bharrat