GEORGETOWN, Guyana, CMC—The six companies that placed bids for eight of Guyana’s oil blocks within the country’s shallow and deepwater areas will soon receive a license, as the Production Sharing Agreement (PSA) has been officially finalized.
The Minister of Natural Resources, Vickram Bharrat, disclosed this during a media conference here on Wednesday.
“We are going to issue the license 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 finalize 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 Bharrat, the PSA was finalized with no changes to the fiscal terms.
“And you know the fiscal terms, it is 10 percent royalty, 10 percent tax, 65 percent cost recovery as against 75 [percent], and it’s a 50/50 profit sharing,” the minister noted.
Bharrat acknowledged that the government proceeded with the bid round despite having limited data on the oil blocks.
Extensive geological surveys are usually 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, and they are currently reviewing it 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.
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.
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