Come February 2023, Guyana will make public the first draft of its new model Production Sharing Agreement (PSA), said Finance Minister, Dr. Ashni Singh.
“We have announced the main elements of a new fiscal framework, which will form the basis of a draft new model PSA to be released in February,” the Senior Minister said in his Budget 2023 presentation to the National Assembly.
A 10% royalty rate will head the new model agreement, up from the 2% paid by the Stabroek Block co-venturers. The 75% cost recovery ceiling has been lowered to 65%. The sharing of profits after cost recovery will remain 50/50 between the government and the contractor. And a corporate tax of 10% will be instituted, where there was none before.
Those terms will apply for blocks issued from the ongoing licensing round and will also be imposed on any current contracts outside of the Stabroek Block if a discovery is made and moves to production.
But the new terms will not apply to the existing Stabroek Block agreement that has been criticised as being too favourable to the Exxon-led consortium operating offshore.
Minister Singh disclosed that in addition to the areas of revised fiscal terms, the government will be strengthening the articles related to the work programme commitments by operators for each block, and put in place an enhanced relinquishment mechanism.
“The expectation is for the new model PSA to be applicable for awards by the end of the first half of this year,” the Finance Minister outlined.
Guyana’s licensing round was launched in December last year; 14 blocks are up for grabs ranging from 1,000-3,000 square kilometres (sq. km). Of those blocks, 11 will be in the shallow area, mainly from what was known as the Oreo area, and the Demerara block, which was relinquished by CGX Energy and Frontera Energy. The remaining three blocks will be in the deep area C at the northeast border with Suriname.
A total of 25 billion potential barrels are at stake.
Get more information here: Guyana Licensing Round 2022 – Ministry of Natural Resources | OilNOW