Tuesday, November 29, 2022

Guyana says new offshore model contract being finalised; auction imminent

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The Guyana government said the Cabinet is working to finalise the model contract which will apply to its offshore auction to be launched soon.

The auction will be open for several months, giving companies ample time to prepare competitive packages, the Ministry of Natural Resources said in a release.

The ministry expects the upcoming bid round to chart a new path as the Guyana offshore emerges as a potential super basin. To this end, the government says it will seek to obtain a fair share of the value of production for Guyana, manage environmental risk, remain competitive, deliver stability, and facilitate an industry leading pace of development.

An intensive campaign is expected to promote the auction.

International oil companies (IOCs) are beginning to consolidate production in super basins which will provide the cheapest and best quality crudes to aid the energy transition.

Guyana among potential ‘energy super basins’ of the world – WoodMac | OilNOW

The prevailing circumstances have resulted in higher costs for floating production units, rig rentals and other necessary components of the exploration and development process.

Governments will therefore be expected to offer fiscal regimes that cater to the current realities. Trinidad and Tobago has had to offer more incentives to attract investments to its shrinking gas sector, after a disappointing offshore bid round came to an end earlier this year.

T&T announces plans to review fiscal regime, make investments more favourable to oil companies | OilNOW

In Guyana’s case, the Stabroek Block PSA secures a royalty of 2% of all crude produced and sold and 50% of profit oil after costs are recovered up to a ceiling of 75%. Taxes are effectively waived.

The current administration says the new model will secure Guyana a higher take. It had warned that the auction may be delayed, as it seeks to find the correct balance between best value for Guyana, while remaining competitive.

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