-but Qatar Energy consortium close
No contract has been entered into as yet from the 2022 oil blocks auction but the consortium of Qatar Energy, TotalEnergies, and Malaysian state-owned oil firm, PETRONAS has gone the furthest in current negotiations with the government, Vice President Bharrat Jagdeo disclosed yesterday.
“It is only one that has reached this stage, at this point and time,” Jagdeo told Stabroek News as he explained that the consortium’s due diligence screening process was completed and the stage was now set to enter into discussions for a petroleum agreement.
Jagdeo pointed out that this information is already public. “We had awarded the blocks already and you know to whom.” He reminded of previous statements where he said that the due diligence process would have to be completed for all the awardees and then the “next stage was to enter the negotiations and then complete.”
The Qatar Energy consortium has signalled to the government that “they are ready to move forward to the conclusion.”
Reuters yesterday reported Minister in the Ministry of Public Works, Deodat Indar, as saying that cabinet had approved a bid for an offshore oil block by a consortium including QatarEnergy, TotalEnergies, and Malaysian state-owned oil firm PETRONAS. This is clearly not so as the negotiations have not been concluded.
Minister of Natural Resources, Vickram Bharrat, echoed the Vice President as he too reminded that “all are at the negotiation stage” still.
Last October, government 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.
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 of last year 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, adding, “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.”
Additional documents
In January, he updated that those companies which accepted awards would have had until the end of that month to submit additional documents requested by government for the due diligence process.
“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.”
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.
Many observers had commented 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 global 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.
