Vice President of Guyana, Dr. Bharrat Jagdeo has announced that by September, a final determination will be made on whether the government will be establishing a National Oil Company (NOC) to develop oil and gas resources or opt to auction its lucrative oil blocks to new investors.
If Guyana goes the route of an NOC, Dr. Jagdeo said the country would play the part of a passive investor, “… and get a strategic developer to work within the company to take shares and operate the company for us.” He made the comments during the Bloomberg New Energy Finance (NEF) Summit on Tuesday.
He said that interest has by piqued by large companies in the Middle East that are eager to become strategic partners.
Investors have signaled keen interest in Block C – a concession which stretches 2.3 million acres (9,600 Km2). The Takutu Basin located in the southern part of the country approximately 480 km (300 miles) from the coast has also garnered much interest. The basin extends westward into Brazil and separates Guyana’s northern and southern geological province.
But before any auction is held, the VP underscored the need to “aggressively enforce” the relinquishment provisions in the oil contracts. Relinquishment sees the contractor surrendering to the State all or part of the block they have been operating on, but only after the first, second, and third renewal periods of its contract have expired.
It is industry practice for the relinquishment of portions of licensed oil blocks to make more acreage available for possible auctions in the future.
Dr. Jagdeo had also emphasized the need for certain policy decisions to be made, relating to the importance of identifying the model of auctioning and the significance of a robust legal framework to guide this process.
He had said too that Guyana could adopt the auctioning practices of neighbouring Suriname — a country that conducts its own 3D seismic surveys and auctions the blocks based on the data gathered and this data allows the government to seek higher bidding prices from interested international oil companies.
A final determination on this will also be made come September, Dr. Jagdeo told the Summit.
And further, a decision is yet to be made on whether the government will preclude current oil block holders like ExxonMobil from being a part of the bidding process.
The Vice President noted at the Summit that public concerns have mounted over the company having a “concentration” of blocks offshore Guyana.
“So, that decision has to be made by the government of Guyana and will be made shortly. We are anticipating by September of this year we will make a determination as to which route, we will go,” he said.
The oil major’s local affiliate – Esso Exploration and Production Guyana Limited (EEPGL), is the operator of Guyana’s Stabroek Block with a 45 percent interest while Hess Corp. holds a 30 percent stake and CNOOC holds the remaining 25 percent stake. ExxonMobil also has operating interest in Guyana’s Kaieteur and Canje Blocks.