While the Guyana government has not yet decided on whether it will exclude from its upcoming oil blocks auction, international oil companies (IOCs) that already have substantial interest in oil block(s) offshore Guyana, Vice President Dr. Bharrat Jagdeo said government is considering the implications such a decision would have.
While there is an argument that allowing those IOCs would run the risk of facilitating a monopolisation of the basin, the Vice President said there’s another argument: “If you reduce the number of bidders, you may get less, may become less competitive, and a lower bid.”
Brazil’s experience in oil blocks auctions may be instructive for Guyana, in this regard. During its 14th and 15th bid rounds, Brazil managed to rake in some of its largest signature bonuses in history.
In the 14th round which occurred in 2017, the signature bonuses added up to approximately US$1.2 billion, with the largest coming from Petrobras and ExxonMobil, at US$701 million for a block in the Campos basin. In total, 20 companies from eight countries participated in the bid round. Brazil’s National Petroleum Agency (ANP) had made a concerted effort to attract companies of different profiles and continues to do so.
During the 15th bid round, in 2018, signature bonuses totaled US$2.3 billion, with the largest being US$848 million for a block in the Campos basin. Again, this largest singular signature bonus came from an Exxon-led consortium. The ANP had said the auction had diversity of operators and geographical diversity. 13 companies from 11 countries had participated.
The Guyanese Vice President said it’s important for government to look at having companies that can do deepwater exploration. This would favour the majors, especially when it comes to ultra-deepwater drilling.
Exxon has already found nearly 11 billion barrels of oil equivalent resources offshore Guyana, spread over 26 discoveries since 2015. With a success rate of over 90 percent, the company has credited this unprecedented string of discoveries to its expertise and use of proprietary technology.
The company already operates three large blocks offshore Guyana: Stabroek, Kaieteur and Canje, representing the largest swathe of acreage offshore the South American country.