With some six companies awarded oil blocks within Guyana’s deep and shallow waters for exploration, the government is key on ensuring these companies have comprehensive and manageable work programmes to ensure adequate utilisation of the blocks for exploration activities.
Speaking on ‘The Guyana Dialogue’ Thursday evening, Minister of Natural Resources, Vickram Bharrat, said the government wants to ensure that these companies have the requisite technical capabilities and resources to achieve the tenets of their work programmes within the time span.
He said this vetting is a crucial step before the issuing of exploration licences, especially since the new Production Sharing Agreement (PSA) imposes a stiff penalty for companies that fail to complete their work programme.
“We want to ensure that they are committed fully to it, that they have the necessary resources and financial backing to ensure that they achieve their work programme. That is if you say you’re going to do seismic studies in the first twelve to fourteen months, we expect that. If you say that you’re going to drill two or three wells before three years, we expect that.
“In that way, we don’t have people holding up oil blocks and not conducting any exploration activities, because we are awarding these blocks with the intention that you have the capacity and resources to do exploration activities,” Minister Bharrat explained.
Therefore, over the next few weeks, the government will continue to engage with the awardees to ensure that they have these capabilities.
This forms part of a strengthened approval process to discourage companies from ‘flipping’ their blocks.
The natural resources minister also reaffirmed that the government is pleased with the response it has received in the recently concluded auction, and said this response is commendable given the highly competitive market.
“The window on oil exploration is closing in, and financing sometimes is a bit difficult, and that’s why we’re even happier that we attracted so many reputable companies, and that we attracted bids for eight of the 14 blocks, because there are many other companies that had bid rounds around the world at the same time that we had ours, and we are pleased that we had these major companies responding,” he noted.
According to the government’s revised PSA, each company is also required to fulfill the minimum signature bonus requirements of US$10 million for shallow water and US$20 million for deepwater blocks.
At a recent press conference, Vice President, Dr Bharrat Jagdeo, said while the government is open to minor adjustments to the PSA, the essential fiscal terms must be left unchanged. This resolve to maintain the fiscal terms is in a bid to promote increased accountability and transparency in the process.
