Guyana launches first licensing round for offshore blocks

The Government of Guyana has launched its first licensing round, offering 14 blocks for tender offshore in shallow and deep-water areas.

The competitive bidding round process, announced in November, officially launched with the publication of the Notice given under the Petroleum (Exploration and Production) Act on Dec. 9, 2022, and is expected to close with the submission of bids on Apr. 14, 2023. Contract awards are expected by May 31, 2023.

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 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 (OGJ Online, Nov. 7, 2022).

The Government of Guyana is developing a new model production sharing agreement that includes a royalty increase 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 50-50 between the contractor and the Government of Guyana.

Minimum work commitments specified for the initial and renewal periods of the prospecting license consist of a combination of seismic and drilling of exploration wells with fulfilment of prior commitment as precondition to enter subsequent renewal periods.

Potential resource offshore Guyana is estimated at more than 25 billion boe with an estimated reserve of more than 11 billion boe.