Government wants local participation in the planned auction of available offshore oil blocks and is hoping for help from the United States with the process.
“We want a model that… will benefit Guyana. I think that is a model in which some blocks can be developed thoroughly and we can have a state oil company that is a different one—one in which the government does not have any management interests, or does not play any part in managing, nor do we put any investment in, but that the Guyanese people are part of what comes out of it, the returns from it,” President Irfaan Ali said when asked by the Stabroek News on Thursday about the stalled auction process.
Ali informed that he had discussed the issue of the auction of the blocks and wanting locals to participate, possibly though partnership with American companies that have the financial wherewithal and experience, when he met with U.S Secretary of Energy Jennifer Granholm.
“So that model has been attracting a lot of attention and I’ve been getting a lot of feedback, a lot of ideas from different players. Only recently, as I said, I had this meeting with the with the US Energy Secretary. We’re having other meetings. So I wanted to give myself an enough opportunity to give myself that feedback on this model, because if we go to an auction and then auction out everything, then we lose the ability to come back to a model like this,” he added.
Minister of Natural Resources Vickram Bharrat recently told the Stabroek News that government is still in the process of putting measures in place for the highly anticipated auctioning of available offshore blocks and consequently the auction would not be likely before the end of the third quarter of 2022.
He did not go into detail about the reasons.
Ali said that the delay should in no way be seen as auctioning of the blocks would not happen but noted that his government wants time to fully assess all variables.
On his recent visit to the United States, Ali had urged American companies to tap into the opportunity and not miss the bid. He had told Reuters that this country expects the auction to attract new companies to its energy industry. And while it was reported by the Financial Post that government was weighing its options on including ExxonMobil in the bidding process, the President clarified that this was not the case. “We are hoping that the participants in the auction… will add diversification… there is no blockage against any company,” he told Reuters.
Ali said that for his proposed “model to work, it requires me getting all the feedback” and technical information which his government has been gathering and which will guide its decision making process, after overall analysis.
“I’m getting a lot of technical feedback from different stakeholders. So that might affect the timeline a bit but the commitment to the auction is fully there. It has not changed at all. It may affect the timeline a little bit. But the commitment to the auction is as strong as ever,” he emphasised.
His position was echoed on Friday by Vice President Bharrat Jagdeo, who said that the biggest variable influencing the determination of a date for the auction is “one about the fiscal terms” but that government was committed to ensuring locals participate and wants the citizenry to debate the pros and cons and give feedback.
Jagdeo said that the administration is cognisant that it will never be able to please everyone but would like to base its decisions on input from citizens on if they feel allowing Guyanese to invest in the process was for the overall good of this country.
“If you include the Guyanese then people would say, ‘Oh, we’re giving people an opportunity to enrich themselves here, because they don’t have the requisite expertise. They would only flip the blocks’. And then if you don’t bring them in, you’ll see all [say] …that we ‘are excluding Guyanese.’ It would be interesting to start a debate of that nature without taking a position on the matter,” he said.
The Vice President’s personal view is that Guyanese should participate and that requirements could be set to ensure that bids come from a group of individuals and that the blocks are not sold to persons barred from bidding or are not flipped immediately after.
“If we can have a big consortium of Guyanese individuals, I personally – I don’t know what the Cabinet’s decision may be but – I would say, let’s give them a chance to prove what they’re saying… If they can raise the money, they can give better fiscal terms to the country and still make a lot of money [then yes]. But not [to] individuals,” he said.
It remains unclear how many offshore areas are due to be relinquished and returned to Guyana by oil companies but areas in the Kanuku, Corentyne, Demerara, Canje and the Kaieteur Blocks are expected to be up for auction.
The total areas to be auctioned also have not been made public. On the availability of remaining blocks, Guyana Geology and Mines Commission (GGMC) Commissioner, Newell Dennison, had in 2018, told this newspaper that from rough determinations, approximately 9,500 sq. km is available within the coastal environment, 24,000 sq. km within the environment of the continental shelf, 10,000 sq. km within the deep water environment and 9,000 sq. km within the ultra-deep water environment. Most interest has been on the offshore area and particularly in the deep water environment following major discoveries there by ExxonMobil in 2015, putting the highly coveted Block C as the most sought after area.
The companies that have blocks in the deep water area are: Repsol and Tullow Oil (the Kanuku Block); Tullow (the Orinduik Block); Anadarko (the Roraima Block); Ratio Oil (the Kaieteur Block); Esso, CNOOC Nexen and Hess (the Stabroek Block); Esso, Mid Atlantic and JHI (the Canje Block); CGX (the Demerara and Corentyne blocks); ON Energy; and Nabi.
An agreement was entered into with ExxonMobil for continued works on scheduled relinquished areas in the Stabroek Block and the then APNU+AFC government had in 2019, announced that the company had relinquished 20% of the Canje Block area. No areas in the coveted Stabroek Block will be up for grabs if the auction is held this year, as Stabroek Block areas only become available in 2026. This newspaper understands that the COVID-19 pandemic induced delays which had slowed ExxonMobil’s operations, hence the company subsequently wrote to the government seeking to regain operational time lost.
