First round of oil blocks bid a ‘success’, to be evaluated before year-end – Jagdeo

The Government of Guyana (GOG) has received eight bids for 14 of the oil blocks upon the conclusion of Guyana’s first round of competitive offshore oil and gas licensing auction.

This was revealed by the People’s Progressive Party’s (PPP) General Secretary who is also Vice President Dr Bharrat Jadeo on Thursday.

Jagdeo, who also holds responsibility for the petroleum sector, has expressed that the government is very pleased with the offers received.

He was at the time speaking at a press engagement held at Freedom House, Robb Street Georgetown. According to the GS, bids were not received for the D3, S1, S2, S6, S9 and S11 oil blocks offshore Guyana.

However, “We’re very pleased with the offers that we’ve had from the bid round which closed a few days ago. As you know, we received bids for eight of the 14 blocks and there were 14 offers in total from six bidders … that means, some of the blocks are very competitive,” he disclosed.

It is important to understand the global context in which the auction was launched, as countries are now moving to net zero and financing for petroleum explorations are becoming scarce.

Also, bid rounds are being hosted in highly advanced countries when compared to the small-producing oil nations.

On the internal side of things, the general secretary explained, Guyana now has a new Production Sharing Agreement (PSA) which increased the royalty rate from two to 10 per cent while a 10 per cent corporate tax has been implemented.

Additionally, the cost recovery has remained at 65 per cent for oil companies operating in Guyana’s petroleum industry.

“Clearly, this is a new factor here now. And then in the Petroleum Activities Bill, we’ve now put in a signing bonus, a requirement to have a work plan and a budget for that work plan and three, a penalty for failure to achieve the work plan,” he added.

In spite of all these stringent regulatory measures implemented by the government, the Ministry of Natural Resources has been able to receive eight offers from companies including from the USA and the United Kingdom.

“Just imagine this bid round taking place under the old conditions, I believe we would have had all 14 of the blocks immediately taken out … it’s a very different context from the Guyana of 2016 when Trotman (Raphael Trotman) signed that agreement,” the GS underscored.

It is not only about the offers, but most importantly, the government has been able to fulfil its commitment by discarding the first-come-first-serve system that was used for the issuance of the first blocks offshore Guyana. 

“We kept that commitment. This is a transparent process for allocating blocks. Secondly, we said we will not complete the bid round unless we have a framework – a Production Sharing Agreement (PSA) and a new Petroleum Activities Bill and we kept those commitments,” Dr Jagdeo emphasised.

The general secretary noted that the evaluation of the bids will be completed before the end of the year.

The government through the Ministry of Natural Resources launched the first-ever competitive offshore oil and gas licensing round in December 2022 with an April 2023 deadline.

However, it was extended to June, July, and then September 12 as the administration moved to advance the sector regulatory framework to ensure accountability and transparency.

Of the 14 blocks, ranging from acreages of 1,000 square kilometres to 3,000 square kilometres, 11 are located in shallow water, while the remaining three can be found in ultra-deep water.