PSA finalised, licence to be issued to oil blocks bidders

A licence will soon be issued to the six companies that bade for eight of Guyana’s oil blocks within the country’s shallow and deep-water areas, as the Production Sharing Agreement (PSA) has been officially finalised.

This was disclosed by the Minister of Natural Resources, Vickram Bharrat, during a media conference on Wednesday, at the Guyana Forestry Commission Complex, Kingston, Georgetown.

“We are going to issue the licence to the bidders…Some of them, especially the locals were looking for international partners. They were looking for investors, they were looking for operators. A few were ready, but we can’t do a separate PSA for every different company. We had to finalise one PSA for all the companies,” the minister explained.

The licenses, once issued, will officially allow these companies to begin their exploration and production activities.

The natural resources minister noted that the bidding process was highly competitive.

The PSA is a critical component of the licensing process, as it defines how the revenues from oil production will be shared between the government and the companies.

According to Minister Bharrat, the PSA was finalised with no changes to the fiscal terms.

“And you know the fiscal terms, it is 10 per cent royalty, 10 per cent tax, 65 per cent cost recovery as against 75 [per cent] and it’s a 50/50 profit sharing,” the minister noted.

Minister Bharrat acknowledged that the government proceeded with the bid round despite having limited data on the oil blocks.

Normally, extensive geological surveys would be conducted to provide detailed information about the oil reserves.

He explained that conducting these surveys would have taken approximately 18 months, delaying the bid round.

“Today, I am happy to say that every single one of those six [companies] have submitted their applications to us. It is six companies and eight blocks, two companies bid for two each. We have given them the PSA, they are currently reviewing that with the intent to sign,” the natural resources minister disclosed.

There is already a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks agreement.

Minister Bharrat said these companies have since indicated that they are ready to pay their signing bonus and assured that the inking of the document will be made public.