As it announced that the auctioning of some 14 offshore blocks will not take place until next year, government yesterday disclosed that the new model oil and gas Production Sharing Agreement (PSA) will see big changes such as the upping of royalty from 2% to 10%, corporation tax of 10% and a limiting of the amount of blocks for companies.
“We have decided to auction 14 blocks, and these 14 blocks will range from about 1,000 square kilometres to about 3,000 square kilometres for each block, with the majority of them being closer to 2,000 square kilometers. Eleven of these will be in the shallow area and three in the Ultra-Deep, Area ‘C’ area,” Vice President Bharrat Jagdeo yesterday told reporters at a press conference he held shortly after Cabinet was updated on issue.
“The new fiscal regime …will now govern not only the award and the contracts that we will sign with the bidders who are successful, but [it] will govern all of the subsequent PSAs that we will sign for any other exploration that will take place in the other areas. The 50/50 profit sharing will be retained. That is the fifty percent [each], yes. The royalty rate will go to 10%. There shall be a corporate tax of 10%. The maximum for any given year going to cost oil will be 65%. These are the key fiscal conditions,” he added.