Guyana intends to open public consultations to afford oil companies a chance to review and make inputs in the new model Production Sharing Agreement (PSA) it is currently drafting.
Vice President, Dr. Bharrat Jagdeo made the disclosure during his presentation at S&P Global’s CERA Week 2023, in Houston, Texas.
Guyana has already released the main fiscal terms of the new PSA. It will feature a 10% royalty rate. The 75% cost recovery ceiling has been lowered to 65%. The sharing of profits after cost recovery will remain 50/50 between the government and the contractor. Additionally, a corporate tax of 10% will be instituted, where there was none before.
Those terms will apply for blocks issued from the ongoing licensing round and will also be imposed on any current contracts outside of the Stabroek Block if a discovery is made and moves to production. The new terms will not apply to the existing Stabroek Block agreement.
The VP said that the public consultations will also extend to Guyana’s outdated oil and gas legislation.
“Because it is not fit for purpose,” the VP said. The Petroleum (Exploration and Production) Act, has been around since 1986 and applies to the exploration, extraction, conservation, and management of petroleum reserves existing in Guyana’s exclusive economic zone (EEZ). The development trajectory of Guyana’s oil and gas sector, especially with the new licensing round, requires more modern provisions.
Guyana has 14 blocks up for grabs in that licensing round, ranging from 1,000-3,000 square kilometres (sq. km). Of those blocks, 11 will be in the shallow area, mainly from what was known as the Oreo area, and the Demerara block, which was relinquished by CGX Energy and Frontera Energy. The remaining three blocks will be in the deep area C at the northeast border with Suriname.
A total of 25 billion potential barrels are at stake.
Get more information on the upcoming bid round here: Guyana Licensing Round 2022 – Ministry of Natural Resources | OilNOW
