With successes offshore Guyana, Exxon interested in bidding for more oil blocks

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Several successful finds in the Stabroek Block offshore Guyana are fuelling ExxonMobil’s interest in the upcoming auction for more oil blocks, President of ExxonMobil Guyana Alistair Routledge said on Thursday.

“We’re always interested in new acreage and clearly where we’ve had some success, it brings a certain degree of interest,” Routledge said during a press engagement.

He disclosed the company has already registered for the bid round and has been furnished with data on the oil blocks being auctioned by the government.

That data, alongside finalised terms for the new oil contracts, will help to inform the oil company’s decision on its participation in the auction.

“… when we have all of that together, then we will be in a position to make a decision on whether or not we bid,” the company Head said.

The bid round for 14 new oil blocks was launched last December and it is expected to close by April 2023. The Guyana Government hopes to award contracts by the end of May 2023.

The oil blocks on auction are for shallow and deep water 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.

This 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.

Guyana is also developing a new model Production Sharing Agreement (PSA)- or, simply, an oil contract ahead of the auction.

This contract is touted as a marked improvement from the PSA signed with the ExxonMobil-led consortium for the prolific Stabroek Block.

Guyana’s Vice President Dr. Bharrat Jagdeo last year said a 10 per cent royalty rate will head the new model agreement, up from the two per cent granted to ExxonMobil for its ongoing exploration and production in the Stabroek Block.

The 75 per cent cost recovery ceiling has been lowered to 65 per cent. The sharing of profits after cost recovery will remain 50/50 between the government and the contractor.

Additionally, a corporate tax of 10 per cent will be instituted, where there was none before.

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