Guyana’s maiden licencing round for 14 offshore blocks could attract US$85M in training funds for Guyanese. One of the terms of the bidding process is that each company would be required to provide US$1M in training fees annually during the exploration phase.
For each of the 11 shallow water blocks, the exploration cycle will last five years. Once all blocks are awarded, this is equivalent to US$55M.
For the three deepwater blocks carrying a 10-year exploration lifespan, this would equate to US$30M.
Guyana could therefore garner at least US$85M if all of the blocks are awarded and last their full cycle. If the operators move to production, the local content investment would likely be higher.
In addition to the local content spending government is desirous of attracting, Guyana is targeting US$290M worth of exploration investments for its deepwater acreage that is bordered by the Kaieteur and Canje blocks. If all three are awarded, Guyana could see US$870M being pumped into 3D seismic work, several geological studies, and at least the drilling of two exploration wells per block.
In the shallow water average, the government is hopeful to have companies sink at least US$95M per block. This could see a total of US$1B being invested over five years. This would entail a similar work programme as outlined for the deepwater concessions.
In terms of signing bonuses, the minimum to be accepted for deepwater blocks is US$20M and US$10M for shallow water concessions. This could therefore attract no less than US$170M should all the blocks be awarded.
The fiscal terms which have been concretized thus far include a 10 per cent royalty payable to the State, 65 per cent cost recovery ceiling, 50 per cent profit sharing, and 10 per cent on Income Tax.
The final terms and conditions will form part of the country’s revised Model Production Sharing Agreement which is set for consultations on February 13, 2023, before being finalized and published on March 8, 2023.
Companies will be able to submit bids on April 14, 2023, with evaluations concluding on May 5, 2023.
The award of contracts will occur on May 31, 2023.
