A consortium with TotalEnergies (French), Qatar Energy and Malaysia’s Petronas has received approval from Cabinet to move ahead with the process of acquiring an oil block offshore Guyana.
This was revealed by Vice President Dr Bharrat Jagdeo in response to questions from the media at his weekly press conference on Thursday.
The consortium was among several companies which submitted bids for eight – two in the deep-sea area and six in shallow areas – offshore oil and gas exploration blocks offered at Guyana’s first auction in 2022.
The government had decided to negotiate the non-fiscal terms to be included in the contracts to ensure uniformity in the conditions of the contracts. This is important to ensure that the conditions for the same type of works remain consistent.
After completing negotiations with the TotalEnergies, Qatar Energy and Malaysia’s Petronas consortium, Jagdeo said “that is cleared at Cabinet already and it’s moving forward…It’s [now] a routine matter to conclude.”
“Most of the others are still in discussion on the PSA (Production Sharing Agreement) because a lot of them have either issues with the PSA [i.e.] the legal terms, not the fiscal terms but the other terms, they’re saying it’s too rigid. We’re having discussions. Some are still looking for partners and operators…so unless those issues are dealt with beforehand, in the negotiations, it’s not going to go to Cabinet to make the final [decision],” he told reporters.
The People’s Progressive Party/Civic (PPP/C) Administration has introduced a series of stringent terms and conditions for new oil deals that the country will sign. These include the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from the previous 75 per cent, while maintaining the retention of the 50-50 profit-sharing after cost recovery.
The 2016 oil contract for the Stabroek Block signed between the ExxonMobil-led co-venturers and the then A Partnership for National Unity/Alliance For Change (APNU/AFC) Coalition Government for production in the oil-rich Stabroek Block had been heavily criticised for low royalty, lack of ring-fencing provisions and cost oil claims that saw Guyana losing billions, among other issues.
