Guyana’s new petroleum agreements seek up to US$85 million in investments into environmental and social projects.
For each of the 14 contracts on offer, the new agreements seek US$1 million in investments into a Fund every year.
11 shallow water contracts will each have five-year exploration periods, and three deepwater contracts will each have 10-year exploration periods. The social fund would therefore accrue a combined US$85 million covering the exploration period for all contracts issued. However, this can expand significantly once contractors seek appraisal, retention or development approvals that extend their time with the offshore blocks.
The stipulation in the agreements falls under the Social Responsibility and Protection of the Environment article of the contract. It states that the Minister with responsibility for Petroleum and the Contractor shall establish a program of financial support for environmental and social projects to be funded by the Contractor.
The Minister and the Contractor will have to meet annually to agree on the projects to be funded in any year. The contracts stipulate that the funds expended under these social projects will not be cost recoverable. ExxonMobil’s existing Stabroek Block agreement requires US$300,000 annually, also not cost recoverable.
According to the Ministry of Natural Resources, companies have expressed interest in all 14 offshore blocks. March 29 is the deadline for comments to be submitted to the government on potential amendments to be made to the draft agreements.
The Stabroek Block co-venturers have set a very high bar for investments in social projects. The Greater Guyana Initiative (GGI) was launched in 2021 – a GY$20 billion (US$100 million) commitment to programs aimed at expanding capacity building and sustainable development in Guyana. The latest project under GGI is a state-of-the-art multi-purpose sports facility at Palmyra, Berbice.
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