The PPP/C Government yesterday announced yet another extension in bidding for offshore oil and blocks and this time to September 12, saying it is because of plans to complete changes to this country’s regulatory framework.
Observers say the several extensions could signal low interest in the blocks and could unnerve investors who may be crafting bid plans. They say that if the government had planned properly there would have been no need for the multiple extensions.
“The Ministry of Natural Resources, on behalf of the Government of Guyana, is pleased to announce the extension of the Guyana 2022 Licensing Round’s bid submission deadline to Tuesday, 12th September 2023. The government’s continuous efforts to streamline and improve the petroleum regulatory framework and the resultant comprehensive feedback received from our stakeholders have led to this necessary extension,” a statement from the Ministry of Natural Resources noted.
“Whilst recognizing the new era of oil and gas development and investors’ confidence in our economy, the government is working to ensure that this competitive licensing bids and future rounds are governed by a modern regulatory framework with improved technical and institutional capacities,” it added.
Government said that it will soon complement the model PSAs with a new Petroleum Activities Bill 2023, “which will not only enhance the management of the sector but also provide improved economic measures for all licensees in the bidding round, as well as future development and production operations in Guyana’s petroleum sector.”
Background
The table below reflects the dates when the bill was launched and the subsequent extensions
In August of last year, Minister of Natural Resources, Vickram Bharrat, told Stabroek News that government was 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 gave assurances that the planned auction will definitely happen before the end of the year.
“It will not be in September [2022] … we are looking at before the end of the year.” Bharrat had been asked a number of questions on the modalities of the planned auction and said they [the questions asked] cannot be answered as details were still being finalised.
The round was officially launched on December 9 of last year and an April 14 deadline had been given.
President Irfaan Ali back then had stressed the need to expeditiously move to develop the country’s oil and gas resources.
“We have a situation where there is a timeframe on oil and gas development. We understand the direction in which the world is going, so it is very important for us to have developers who are serious, who will expeditiously move towards developments of the oil and gas resources,” he was quoted as saying.
He added that April 14, 2023 had been set as the deadline for the close of submission for bids, and contracts were expected to be awarded by the end of May, 2023, following the evaluation of bids and negotiations.
On January 17 this year, President Ali said that Guyana had sought to galvanise interest from the Indian private sector so that they can participate in the auction of offshore blocks and government made it clear to the Indian government, as it has with other nations, that they too can bid.
“There was also a clear undertaking that the private sector of India wants to partake in that auction… we also encouraged the Government of India to have their agency participate directly in the auction because we would like to see as much people [as possible]. Every government interested and would like to participate in the auction, we would like see participate,” he stressed.
Maximum participation
And as he issued a public invitation for bidding at the auction, the President said that government hopes for maximum participation. “We are encouraging every single company. Let me say this very clear – Guyanese company, any company. You want to be part of the auction? Please come up. Any government in any part of the world, any company in any part of the world, you are free to be a part of the auction,” he emphasised.
But on April 12, 2023, the Ministry of Natural Resources announced that the extension of the Guyana 2022 Licensing Round’s bid submission deadline was moved to July 15, 2023.
A statement from the ministry said then that the industry feedback and the advanced pace of modernising the oil and gas regulatory framework underscored the extended bidding period for the nation’s first competitive offshore oil and gas licensing round.
Then in June of this year, Reuters reported that Vice President Bharrat Jagdeo had told it that this country was again postponing, by about one month, the oil blocks auction, as the country finalises new terms of the country’s oil and gas regulatory framework. The report noted that Guyana has three times before, delayed the offer of 14 offshore blocks intended to recruit new explorers and reduce the hold over its oil output by a group led by ExxonMobil Corp.
The oil auction postponement was due to local elections held during that week, Jagdeo had told Reuters. A new date for the auction had not been set, he said.
On the 22nd of June, he told a press conference that the auction will remain open until the completion of a new PSA and upgrade of its archaic petroleum laws to suit the current times and global standards.
“On the auction, we plan to extend it, as I have said before, for another period. We will determine what period. Should not be for much of a time, but almost every one of the people who have indicated an interest so far, in participating in the auction, they have been told, and I think they appreciate it; that we are sticking with our commitment to have the framework law in place and the new PSA before the bids come in,” he said.
He had said then that the bill was out for public consultation and anticipated increased feedback, as it was not complex or lengthy, since he “could read the bill overnight and have all his views there”.
Jagdeo had also informed that a global firm “with enormous experience in this sector had helped work on the Bill. “We looked at similar framework legislation globally and a lot of the issues addressed, in those modern pieces of legislation where we were deficient in our laws, have been addressed and a lot of the issues would be dealt subsequently after the passage of the Bill through regulations.”
The Vice President added that he anticipated that there would be smooth passage for the Bill and it would be enacted so as to trigger “a series of regulations to give effect to the Bill”.
“We are repealing all of the regulations under the old Act but we’ve looked at if anything would suffer in the absence of the repealed regulations, like if we repeal them and there are no new regulations at them. We have looked at them and most of those regulations deal with reporting issues and a lot of these are already covered in the existing PSAs so there’d be no major gap between the period when we pass the law and repeal the regulations to the enactment of the new regulations. No major policy gap or enforcement gap,” he had explained.
The July 15 deadline passed and government yesterday gave the new date, possibly expecting that the Bill would be passed before Parliament goes on recess in next month, and then it would be swiftly enacted.
Government says that it has “benefited from insightful feedback during the consultation periods of the Indicative Terms and Guidelines, the draft model production sharing agreements (PSAs) and the draft Petroleum Activities Bill” and that the auction continues to receive “strong global interest.”
