As it prepares to launch its first auction of oil blocks, government yesterday said that it was finalizing the fiscal terms and conditions to guide those agreements it will enter into and will ensure the nation gets a “fairer share” from its oils and gas resources.
And as it wants maximum global interest and competitive bidding, it said that it will be embarking on “an intensive promoting campaign” that will ensure this.
“Cabinet is finalizing the new fiscal terms and conditions which will allow for the country to gain the maximum economic benefits as we advance the exploration and development of the Guyana offshore blocks,” a press release from the Ministry of Natural Resources said yesterday.
According to the release, the 2022 bidding round will be opened for a number of months so as to give bidders ample time to prepare. “The 2022 bidding round, which is expected to be officially launched soon, and will be opened for several months which will give interested companies sufficient time to prepare their competitive packages and bid to win the available acreages offshore; which will be done in an open and transparent manner,” the release said.
Government has said that it wants local participation in the planned auction of available offshore oil blocks.
Government said that when Cabinet has concluded setting the definitive terms of reference for the licensing round, it would achieve a number of objectives. They include ensuring that the country gets “a fairer share of revenues from oil and gas resources through improved fiscal arrangements to benefit the people of Guyana; safeguarding the safety of people and the environment by following international best practices in offshore oil and gas development; assuring investors of stability, predictability, and security on investment; and continuing with efficient and sustainable development of oil and gas resources while balancing the nation’s developmental agenda with its climate change goals.
Minister of Natural Resources Vickram Bharrat had last month told Stabroek News that government was still in the process of putting measures in place for the highly anticipated auction and consequently it would not likely be held before the end of the third quarter of 2022.
For his part, President Irfaan Ali has said he wants locals to participate and that 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 had told this newspaper.
This newspaper understands that it is Vice President Bharrat Jagdeo, whose portfolio includes finance and overlooking the petroleum sector, that is spearheading the setting of both the terms of reference and overlooking the fiscal arrangement for a new model Production Sharing Agreement.
The total areas to be auctioned also have not been made public. On the availability of remaining blocks, Guyana Geo-logy 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.
