President Irfaan Ali officially launched the nation’s first competitive bid round for 14 blocks on Friday morning. The Head of State said submissions for these concessions, which are contiguous to the oil rich Stabroek Block, closes on April 14, 2023. He said the government expects to make the relevant awards by the end of May 2023.
During a Facebook live, the President said that the bid round and its accompanying model Production Sharing Agreement (PSA) reflects the administration’s desire for the best possible outcome for the country given lessons learnt from the 2016 Stabroek Block contract. That PSA was highly criticized by industry stakeholders for its weak provisions on insurance for oil spills and local content. It was also condemned for having a paltry two percent royalty.
Ali confidently declared this morning that the PPP/C administration will ensure the new blocks are subjected to better terms and conditions.
He said too that these blocks will be underpinned by aggressive terms for relinquishment. “There is a time frame on oil and gas development, and we understand the direction in which the world is going. It is important for us to have developers who are serious, who will, in an expeditious manner, move towards the development of the oil and gas resources found…Once the bidder does not fulfill their obligation for exploration and production, the process of relinquishment, that is where they have to hand back the block, is implemented,” Ali explained.
Ali also reminded that the bid round will see improved fiscal terms. He recalled that this would include a 10 percent royalty, payment of a 10 percent Corporate Tax and a 65 percent cost recovery ceiling.
With there being 11 shallow water blocks and three in deepwater, Ali also clarified that there will be different requirements regarding expertise and capabilities.
“There are minimum entry requirements for shallow water blocks. But there is a high bar set for those who wish to enter the deepwater blocks which is more complex. Deepwater is also very capital intensive and requires specialized skills and a different level of exploration and production activity and so that distinction will be made and seen,” the Head of State said.
Ali also reminded that there will be an acceptance of a minimum of a US$10M signing bonus for shallow blocks and US$20M for the deepwater blocks. He said there is a US$20,000 participation fee to gain access to the virtual data room and participate in the bid round.
“The Guyana offshore basin has captivated the attention of the global market participants and it is now labelled the gateway to the world’s fastest growing super basin… Guyana’s basin is estimated to have potential resources in excess of 25 billion barrels of oil equivalent and an estimated reserve in excess of 11 billion barrels in the Stabroek Block,” Ali stated.
The President said it is the administration’s hope that the bid will attract partners who share in its vision to unlock these resources and develop same in the interest of its people.
See more details on Guyana’s Competitive Bidding Round 2022 below:
