The Government of Guyana has concluded negotiations on the new Production Sharing Agreement (PSA) with six companies looking to commence oil exploration soon. The companies will occupy a total of eight oil blocks.
During a press conference on Wednesday, Minister of Natural Resources Vickram Bharrat disclosed that “the PSA has been finalised with no changes to the fiscal terms.”
Unlike the 2016 oil contract signed between the ExxonMobil-led co-venturers and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition government, the new agreement outlines an increase in royalty from two per cent to 10 per cent, a 65 per cent cost recovery as opposed to the previous 75 per cent, and the retention of the 50-50 profit-sharing.
“This means we will get more upfront,” Bharrat said.
While the fiscal terms for each company remain the same, the work programme will differ.
Each company is required to pay a signing bonus of US$10M for shallow water projects and US$20M for deepwater projects.
“All of them have indicated that they’re ready to pay their signing bonus. We will ensure that the payment of the signing bonus is made and of course it will be made public,” the Minister said.
The companies –some of which are consortiums –were selected following an auction which was launched in December 2022 and closed off in September 2023. In total, there were 14 offers made on those blocks – two deep-sea blocks and six shallow-area blocks.
Among those awarded oil blocks during the bid round was a Guyanese female-led company, Sispro Inc, which received a shallow block (S3) and a deep-water block (D2). Other shallow blocks were awarded to Total Energies EP Guyana BV in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia), which got Block S4; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited, which got Block S7, and International Group Investment Inc of Nigeria, which got two blocks – S5 and S10.
Another shallow block, S8, was awarded to the Stabroek Block partners – ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited. The second deep-water block – D1 – was awarded to Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.
“Some may sign before some but it will be the same PSA,” the minister told reporters at Wednesday’s press conference.
Vice President Dr Bharrat Jagdeo had previously noted that this new PSA is said to be one of the toughest oil contracts in the market.
