Six companies to begin oil exploration, gov’t proceeded with bid despite limited data on oil blocks

Government will soon issue licence to the six companies that bid for eight of Guyana’s oil blocks within the country’s shallow and deep-water areas, as the Production Sharing Agreement (PSA) has been officially finalised. So said Minister of Natural Resources, Vickram Bharrat, during a media conference on Wednesday.

Minister Bharrat acknowledged that the government proceeded with the bid round despite having limited data on the oil blocks. Normally, extensive geological surveys would be conducted to provide detailed information about the oil reserves.

According to the minister conducting these surveys would have taken approximately 18 months, which would have delayed the bid round.

The government is “going to issue the licence to the bidders…Some of them, especially the locals were looking for international partners. They were looking for investors, they were looking for operators. A few were ready, but we can’t do a separate PSA for every different company. We had to finalise one PSA for all the companies.”

The licenses, once issued, will officially allow these companies to begin their exploration and production activities.

The PSA is a critical component of the licensing process, as it defines how the revenues from oil production will be shared between the government and the companies.

According to the minister the PSA was finalised with no changes to the fiscal terms.

Reportedly it will be it is 10 per cent royalty, 10 per cent tax, 65 per cent cost recovery as against 75 [per cent] and it’s a 50/50 profit sharing,” the minister noted.

The Government said there is already a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks agreement, and the companies have since indicated a willingness to pay their signing bonus and assured that the inking of the document will be made public.