All 14 blocks on auction in Guyana’s ongoing licensing round have received expressions of interest, the government said in a statement Tuesday. Guyana’s Ministry of Natural Resources has published new model contracts to govern the three deepwater and 11 shallow water blocks to be issued in the round. The contracts are also applicable for existing petroleum agreements, except for the Stabroek Block.
The release of the contract commences a period of 14 days of consultations.
The government said the draft agreements embody rigorous research and analysis by internal expertise and external consultants.
“The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context,” the government said. Existing agreements had come in for years of criticism, especially the Stabroek Block contract. Every aspect of the existing contracts has been discussed widely in the local and international media, giving the administration a clear picture of the provisions the public has not been happy with.
Guyana has already released the main fiscal terms of the new PSA. It will feature a 10% royalty rate. The 75% cost recovery ceiling has been lowered to 65%. The sharing of profits after cost recovery will remain 50/50 between the government and the contractor. Additionally, a corporate tax of 10% will be instituted, where there was none before.
The release of the contract did not adhere to the original schedule of activities for the ongoing licensing round. The government, therefore, said it will amend the schedule.
The government said it is committed to establishing a model PSA that is guided by industry standards and best practices, aimed at maximising the socioeconomic benefit for the nation without disincentivising foreign investment in the oil and gas sector.
Some major international oil companies that have shown interest include Petrobras, Chevron and Shell. The round is the first competitive process for the issuance of oil blocks. 25 billion barrels are at stake.
ExxonMobil has substantially derisked the Guyana basin, having discovered 11 billion oil-equivalent barrels in the Stabroek Block.
Click here to get more details on the Licensing Round: https://oilnow.gy/glr2022/