Guyana, the fastest growing economy in the world, is currently experiencing unprecedented growth and interest from investors across the world as a result of an oil boom that is giving it a competitive edge over many of its neighbours.
Government’s commitment to respecting agreements made with investors, such as the Production Sharing Agreement (PSA) with ExxonMobil for the 6.6 million acres Stabroek Block, forms a crucial component of how the country is perceived on the international stage, says Natural Resources Minister, Vickram Bharrat.
At a recent private sector engagement, Mr. Bharrat said the country risks grave injury to the its reputation if it becomes apparent that it has no respect for investments and the contracts they are tied to.
He said Exxon and its partners, Hess and CNOOC, have faced criticism over the years regarding the contract, but no one can deny that operations developed under its terms have catapulted the country to the world stage.
“We have moved from discovery in 2015, to first oil in 2019, to producing close to 380,000 barrels per day. We are on course to produce a million barrels a day in four years. We have already signed two more production licences, namely Payara and Yellowtail and the [field development plan [FDP] for the fifth project at Uaru will be submitted very shortly by Exxon. We are therefore on course for exponential growth,” he said.
The PSA has enabled over 30 discoveries amounting to more than 11 billion barrels of oil equivalent resources, placing Guyana at number 17 in the world for petroleum reserves.
Mr. Bharrat said Exxon and its partners must be commended for placing Guyana on a production trajectory that will see it rubbing shoulders with some of the most well-respected producers from the Organisation of Petroleum Exporting Countries (OPEC). In this regard, he said the government will remain steadfast in its commitment to preserving the PSA signed in 2016.
“We want Guyana to be seen as a stable country where investments are secured and there is predictability in companies investing in our country. Otherwise, we would be doing an injustice to our country… if we don’t do that, believe me, investors will no longer line up in Guyana because there would be this fear that every time the government changes, there would be a renegotiation of contracts,” Mr. Bharrat stated.
He reminded that the government has however kept its promise for future petroleum agreements to be tied to a new fiscal regime that features 10% royalty, up from 2%, and a 65% cost-recovery ceiling, down from 75%, in addition to a 50/50 profit share. These new terms are expected to inform the model PSA being developed for use in Guyana’s upcoming maiden auction of 14 blocks.