The Government of Guyana, through the Ministry of Natural Resources, will auction off 14 oil blocks in the nation’s first-ever competitive offshore oil and gas licensing round with new fiscal terms will guide future offshore investments should projects reach production stage, the agency said in a release Nov. 4.
The blocks range in acreage from 1,000 sq km to 3,000 sq km. Eleven are in shallow water, while the remaining three are in ultra-deep water. Oil companies participating in the upcoming auction will be required to pay a minimum signing bonus of $10 million for shallow blocks while deep-water blocks carry a signing bonus of $20 million.
As part of this new model agreement, the royalty has been increased to 10% from the 2% granted to Stabroek block. The current 75% cost recovery ceiling has been lowered to 65%. Profit sharing after cost recovery remains the currently-applied 50-50 system between the contractor and the Government of Guyana. These new terms have doubled Guyana’s share to 27.5% from 14.5%, plus the newly introduced 10% corporate tax.
Qualified companies with a proven track record of technical, financial, health and safety, and environmental capabilities can bid, the agency said. Bidders will be assessed based on their guaranteed work programs which will be weighed with the offered signing bonus. Local content commitments also will be examined.
There will be no restrictions on how many bids a company may submit, but each successful bidder will be limited to an award of three blocks.
The government will make amendments to the Petroleum (Exploration and Production) Act 1986 to reflect, where necessary, fiscal changes identified for this national bid round and all future operations. The licensing round process is expected last for 5 months and should be concluded by the end of first-quarter 2023.
