For Guyana’s first oil blocks auction, the government has said successful bidders will have to pay a minimum of US$10 million for each of the 11 shallow water blocks in play. They would also have to pay a minimum of US$20 million for the three deepwater blocks up for grabs in the ultra-deep Area C.
If the government is successful in awarding all 14 blocks, it therefore, means that the country will earn no less than US$170 million in signing bonuses.
For the Stabroek Block, which spans 26,800 square kilometres (sq. km), US$18 million was received.
Vice President Dr. Bharrat Jagdeo told reporters on Thursday that signing bonuses would be required in the upcoming auction. He said the sizes of the blocks range from 1,000-3,000 sq. km.
He said too that authorities will create a data room that bidders can use prior to making their offers.
“We don’t have data for all the areas. We have maybe some 2D seismic, 3D seismic for some areas. All the prospective bidders would have access to the data room. They will assess the data. Then they will decide if they want to put in a bid or not. Nobody is forcing anyone,” the VP explained.
The signature bonus is also part of a slew of other terms which characterise the new fiscal regime for Production Sharing Agreements (PSA). The other terms include a 10 % royalty, a 50/50 profit sharing, a 10% corporation tax and a 65% cost recovery ceiling.
Though there are 65 countries that are either preparing for a bid round or have launched one, the VP expressed confidence that Guyana’s terms are still competitive and will attract interest since the basin has been derisked by more than 30 significant discoveries.
IHS Markit is part of the consultancy team helping Guyana prepare for its first auction, set to last for five months.