President Ali officially launches auction for new oil blocks
President Irfaan Ali on Friday morning officially launched the first auction for the development of new oil blocks under competitive terms as the government looks for “expeditious” development of oil and gas resources
A total of 14 new oil blocks are up for grabs and the government is hoping to award new contracts by the end of May 2023, Dr Ali said, going LIVE on his Facebook page.
The President noted that the Guyana offshore basin has captivated the attention of the global oil market participants, being called the world’s fastest-growing super basin, with estimated resources in excess of 25 billion barrels of oil equivalent (boe) and an estimated reserve in excess of 11 billion boe.
The licensing round allows the Government of Guyana to create and administer an improved fiscal and regulatory framework that is driven by good international oil field practices and standards, the President pointed out.
“What we are seeking to do is to have the best possible outcome for Guyana, given the lessons we have learnt,” President Ali stated. So far, a consortium of companies – Exxon, Hess and CNOOC – are the developers of a giant block called Stabroek offshore Guyana.
There has been much criticism of the terms of the Stabroek contract, but the government has said it honours the sanctity of contracts and will not renegotiate but that any other contract will see improved terms.
The oil blocks on auction are for shallow and deepwater areas.
There will be separate requirements for qualification to participate in deepwater versus shallow water blocks for tender with a higher bar set for deepwater areas, which reflects the capital-intensive nature of deepwater exploration and production (E&P) and the highly specialised technical competence required for deepwater E&P activities
There will be a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks.
The minimum work commitments specified for the initial and renewal periods of the prospecting licence consist of a combination of seismic and drilling of exploration wells with the fulfilment of prior commitment as a precondition to enter into the subsequent renewal periods.
There is a participation fee of US$20,000 in respect of a block for tender in order to gain access to the virtual data room and participate in the competitive bidding process.
The President said Guyana is aiming for a “balance” to ensure that the country gets the best possible deal in terms of revenue while at the same time not scaring off investors, recogninig that “the cost for capital is going up and we also understand the access to capital has become cumbersome.”
The government is in the process of developing a new model production sharing agreement that will reflect the indicative terms and guidelines for the licensing round and introduce comprehensive provisions reflective of the developments in the oil and gas industry and international best practices observed in other jurisdictions.