Vice President Dr Bharrat Jagdeo has clarified that in relation to Spanish oil company Repsol Exploration, government has reacquired the Kanuku block. He indicated that the US$500 million invested by the company over the span of its license cannot be reclaimed, and moreover, a fresh licence will have to be issued should that decision be made for the block to be in their possession again.
Jagdeo divulged, “If the Cabinet decides to work with them to issue a new licence, not a renewal for this block, then all the new conditions would apply. It would be the same as a person coming there for the first time. There would be no carried interests across.”
“If you move to a production licence, then you can claim the cost for exploration as part of the cost back because you are earning. If there is no production, then you can’t come to the country and say ‘we spent US$500 million here; the license has come to an end. I haven’t moved to production so I want back my money”.
In September of 2019, Repsol had started drilling the Carapa-1 well in the Kanuku Block. That well alone was reported to cost US$20 million and was drilled using the Valaris EXL II jack-up rig. However, while approximately four metres of net oil pay was found, British-owned Tullow Oil, which owns a stake in the Kanuku Block alongside Repsol, had announced that it would not be commercialising the well.
Repsol was the operator of the Kanuku Block, with a 37.5 per cent stake. Tullow Guyana BV also held an equal 37.5 per cent stake while Total E&P Guyana BV had the remaining 25 per cent.
