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Guyana’s upcoming bidding round for offshore areas has caught the interest of top energy companies from Asia to Europe, according to people familiar with the matter, even as the government continues to work out terms for the auction.
According to Reuters, in an Exclusive January 16, 2023 story, the Government wants to quickly expand its oil industry and recruit developers to counterbalance an Exxon Mobil Corp (XOM.N)-led consortium that now controls all production. Exxon has outlined its plans to install at least seven vessels to tap more than 11 billion barrels discovered to date.
India’s ONGC Videsh (ONVI.NS), the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC.NS), is considering a bid for some of the 14 exploration blocks the country has put on offer. Refiner Indian Oil Corp (IOC.NS) also is looking to work in Guyana in collaboration with ONGC Videsh, two people close to the talks told Reuters.
President Irfaan Ali travelled to India and encouraged energy companies to participate in the auction. Similar invitation was extended to Chinese firms. The Government might consider allocating areas directly to strategic partners through government-to-government negotiations, Reuters report officials as saying.
TotalEnergies CEO says refineries won’t be disrupted by Thursday strike day “ONGC Videsh continues to consider, evaluate and process several global business opportunities,” a spokesperson said in a statement. “For reasons of confidentiality and as a policy, we do not comment on specific opportunities until there are definitive agreements in place.”
Reuters reported the IOC did not respond to its request for comment.
Guyana is offering three deep-water and 11 shallow-water blocks, each averaging 2,000 square kilometers (722 sq miles). Bids are expected to be opened in April in Georgetown.
Several European companies in recent months also have researched the auction’s terms to consider bidding, two other people familiar with the matter said.
Exxon is also considering bids on the blocks, according to the country country chief, Alistair Routledge. “Of course, we will look at it,” Routledge told Reuters in an interview.
Many bidding decisions are contingent on Guyana clarifying terms of a new production sharing agreement (PSA) that differ from that signed with the Exxon consortium for its 26,800 sq km Stabroek block.
Oil analysts and experts say they are not expecting the new PSA model to meet a Jan. 31 deadline amid unfinished contract language, legislative changes needed to reflect the new framework, and work pending to organize the auction.
Minister Ashni Singh on Monday said the licensing round will be open through April 14, with successful bids to be awarded by the end of the first half of the year.
U.S. firm IHSMarkit was selected last year as lead consultant for the auction.
Government did not restrict the amount of blocks companies can bid for, but will limit the awards to three per company, said Reuters.
Winners will be required to submit work programs as part of their bids and present guarantees on those programs. If winners have not fulfilled the investment programs as required, the government could impose penalties or claw back acreage for future auctions.
“We want a greater turnover,” Guyanese Vice President Bharrat Jagdeo said in November. “This is trying to solve a lot of the problems we have had with other areas where people just sat on these and then they relinquished them after a long period.”
Last year, Exxon, Hess Corp (HES.N) and China’s CNOOC (0883.HK) ramped up oil output and exports with their second production vessel. The increased output began just before the acceleration of global demand in the aftermath of Russia’s invasion of Ukraine and sanctions derived from it.
Reporting by Reuters’ Marianna Parraga Nidhi Verma and Neil Marks. Story extracted and edited by Village Voice.