Failed oil block auction may cost Guyana billions in deferred revenue-Opposition

“After much fanfare, Guyana’s first offshore oil block auction has become such an unmitigated disaster that Bharrat Jagdeo is now trying desperately to salvage it. He has recently informed the nation about granting more concessions to the winners of the bids and his government’s intention to conduct seismic studies in unawarded blocks. This is the same man who was adamant previously that the oil block auction simply could not wait on seismic studies.” So said the Opposition, A Partnership for National Unity and Alliance for Change (APNU+AFC).

Speaking at a recent press conference, the Opposition noted that seismic studies would have allowed bidders to access much more detailed information about each block yet Government decided to push forward with the auction without the needed studies. Flaying Jagdeo for not doing his homework, the Opposition said he must now go back and conduct the very seismic studies he neglected.

“Without comprehensive seismic studies and large enough blocks to allow companies access to more than one type of oil prospect (as has been the convention with Guyana’s oil blocks) these strict terms were bound to turn investors away from the start, and lead to endless negotiations with those who were brave enough to stay the course.”

Countering with a proposal to mitigate the disaster the Opposition called for a thorough review of any oil blocks that may be auctioned in the future. These Opposition said the review must be conducted, in concert with seismic studies, so that we can properly size oil blocks to make them attractive.

Guyana Oil Block (Opposition Facebook photo)

“We also believe that companies who are interested but unable to reach an agreement with the government for various prospects should be engaged to identify acceptable variances to the terms of agreement that would allow work to proceed.” To this end the Opposition wants to see the responsibility to approve operational budgets, to that “of robust Petroleum Commission which can operate at a large enough scale, and great enough level of expertise, to ensure the smooth function of the industry.”

Such a commission, the Opposition said can operate at a large enough scale, and great enough level of expertise, to ensure the smooth function of the industry.

Expressing further concern of the handing of the oil block by the People’s Progressive Party (PPP) Government, the Opposition said the party must not be allowed to treat Guyana’s remaining oil blocks, and any acreage which is relinquished in the future, as personal property.

“This attitude has set any oil production in these blocks back by several years and as a result may cost the country billions of dollars in deferred revenue at best and investor interest altogether at worst. There may be several billion barrels of oil in the remaining offshore oil acreage, as the USGS has long indicated the robust potential of our offshore territory. To mismanage such a substantial national asset, to this extent, is totally unacceptable.”