With the right fiscal regime in place, Guyana could reap the most benefits from the upcoming oil block auction, Norway’s Rystad Energy said.
The highly anticipated auction will be the first time Guyana hands out oil licenses through a competitive process. Its investment prospectus mentioned the 9,600 km2 Area C, a deepwater acreage bordered by the Kaieteur and Canje blocks, and the Suriname border.
There is also the relinquished portion of the Canje block, with an area of about 1,352 km2.
And according to Rystad Energy’s Head of Latin America and the Caribbean, Schreiner Parker, there is already an investor appetite to come to Guyana.
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The Stabroek Block’s success has created enough buzz to pull investors, but Parker was keen to point out that favourable terms are also needed to ensure the investors stay.
“What is going to be important is that the fiscal regime represents the fact that these are still exploration blocks and that companies do have to come and invest monies,” he explained.
Parker cited Brazil as an example for Guyana to take lessons from. A close neighbour to Guyana, the country has one of the most exciting pre-salt exploration basins, yet it is unable to garner new investors.
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“In recent years, they have had unsuccessful bid rounds. Even though Brazil is an extremely important source of offshore production globally, they were unable to attract the interest that they wanted because the fiscal regimes were too onerous and they were asking for too much,” he outlined.
And this is what Guyana must balance if it wants to win during the bid rounds.
“The expectation, and what we would probably see, is that the fiscal regime will be more favourable to Guyana, but it is a matter of getting that right. What is the sweet spot,” the Rystad Energy analyst said.