Companies which accepted awards in this country’s first oil blocks bid round have until the end of this month to submit additional documents requested by government for the due diligence process, Vice President Bharrat Jagdeo yesterday announced.
“I met with the minister [of Natural Resources Vickram Bharrat] and he said the firms were requested to supply additional information… he said the deadline for the submission of additional information is the end of this month,” Jagdeo yesterday told a press conference.
The Vice President explained that firms were given awards based on initial documents submitted but were told since then that they would have to submit other documents as needed for the due diligence process with government before any agreement could be reached.
“We assessed the proposals on a number of criteria. Now we have to verify what are in those proposals… before the final sign off. We have to do the due diligence to see what was in the proposal that won the bid [that] the companies can meet those obligations and they have the wherewithal to address those issues.”
“That is where we are now. The source of funds have to be legal and everything attached to it [scrutinized],” he added.
At the end of last year, the Minister of Natural Resources had told this newspaper that all six companies have accepted the terms of the sale for their respective oil block/s awards, following the 2022 licensing round auction and that government was optimistic that the agreements would be closed soon.
“Negotiations are ongoing. [It] will be wrapped up by early 2024, hopefully end of January,” Bharrat said.
“To date everyone has indicated their interest and committed to [respective] work programmes and signing bonus…,” he added.
Stabroek News understands that some of the companies had indicated that their representatives will travel to Guyana to conclude talks early this month, as they would have been awaiting the “settling” of events of the Christmas holiday season and were also waiting on the Guyana/Venezuela talks to conclude.
However, one official was quick to point out that although the companies were waiting on the conclusion of the talks, Venezuela’s spurious posture on Essequibo would have “no bearing on their acceptance.” Venezuela had revved up the border controversy at the time the blocks were awarded in October.
Jagdeo had stated in November that although the Cabinet has approved these awards, the respective companies which are currently in engagement, have to verify their plans, show sources of financing, and the ability to pay the signature bonus among other credentials. The VP said that once all of these procedures are followed, these companies will know how they stand in terms of the negotiations.
The government in October had announced the recipients of oil block awards for the country’s deep- and shallow-water blocks, which were auctioned during the 2022 Licensing Round.
The successful companies were Sispro Inc (Guyana), awarded S3 Block; Total Energies EP Guyana BV, Qatar Energy International E&P LLC, Petronas E&P Overseas Ventures SDN BHD (Malaysia), awarded S4 Block; International Group Investment Inc, awarded S5 Block; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited awarded S7 Block; Exxon/Hess/CNOOC awarded S8 Block; International Group Investment Inc, awarded S10 Block; Delcorp Inc Guyana, comprising Watad Energy and Communications Limited & Arabian Drillers of Saudi Arabia awarded D1; and Sispro Inc (Guyana) awarded D2. Sispro Inc is a Guyanese women-led company.
The 2022 Licensing Round, Guyana’s first-ever auction, was initially announced in December 2022 by President Irfaan Ali. After several extensions and updates to the fiscal framework, the auction concluded with six bidders submitting 14 offers for eight of the 14 oil blocks offshore Guyana.
Jagdeo had explained in October that if one of the larger companies agreed to the draft Production Sharing Agreement, this country’s government will be ready to collect the money and deposit it, but if another company wanted time to finalise plans, they will be given that scope. “We want to do a good job. Time is not the issue here; it is doing a good job. Ensuring that the due diligence is done, and getting a proper contract signed. We are not running a sprint here,” he had said, “so if it takes one month in some cases and three in another, providing a good job is done…
“In the discussions, we will know if people are serious. If a company said ‘we need two years,’ we can’t have that. So, let’s have the discussions first with the companies and… then get a decision on the maximum time.”
Many observers had said that given the adjusted terms of the Production Sharing Agreement, which were far more beneficial to Guyana than the one ExxonMobil sealed in 2016, there would not likely be many bidders. This was particularly so given the increasing shift away from fossil fuels and the projections that in a decade or so, demand would fall substantially. Bidders face a probable 15-year timeline between exploration and possible production with no guarantee that light crude would be found.
