Vice President Dr. Bharrat Jagdeo has reaffirmed that any new Production Sharing Agreements (PSA) that Guyana enters into will obtain better terms than what was secured by the APNU+AFC Government with the Stabroek Block.
The Vice President’s statement comes on the heels of a new oil discovery by CGX Energy and Frontera Energy Group in the Corentyne Block. This is the first time that an oil discovery of commercial quantity has ever been made outside of the prolific Stabroek Block where ExxonMobil is operating.
During his first press conference for 2022 on Thursday, Dr. Jagdeo underpinned the unique opportune moment Guyana holds in the exploitation of its oil and gas resources.
“We have a window in which we want to accelerate production, to transfer what is a buried asset and might become stranded into financial assets. We therefore have to take that into account too. However, the conditions will be better,” the Vice President assured.
In drafting any new PSA, Dr. Jagdeo indicated that the government intends to address areas related to the fiscal terms of the contract, listing royalty, ring-fencing, and the tax regime as some of these areas.
The Stabroek Block PSA signed in 2016 under the former government, has received condemnation far and wide for its lopsided provisions. The government has been keen not to renegotiate the 2016 PSA on the basis of contract sanctity. Notwithstanding this, the Dr. Irfaan Ali-led administration has committed to capitalising and securing maximum benefits for Guyana and Guyanese from its oil and gas sector, with future contracts and through legislation.
Already on the legislative side, the government has put in place the Local Content Act which sees preference being given to Guyanese companies and nationals in the procurement of goods, services and employment in the oil and gas sector. Through this law, Guyanese companies can rake in about US$500 million annually in revenues.
Importantly too, the government plans to transparently auction off relinquished oil blocks offshore Guyana in the third quarter of this year. Updating the media on this progress, Dr. Jagdeo highlighted that the government is examining what blocks have been relinquished and are yet to be relinquished.
“We have to make a determination, however; we have been receiving lots of advice that we should pay and go with the seismic [data and] you could possibly increase the value of the blocks when you auction them… Or alternately, just auction the blocks off as they are… And then there has been a third suggestion about whether we want to vest all of these blocks into a national oil company.”
The Vice President gave his commitment that a final determination on the way forward will be made before the third quarter. [Extracted and Modified from DPI]
