Guyana To Launch First Oil Tender Under New Rules

Guyana To Launch First Oil Tender Under New Rules

Guyana’s next oil tender will be conducted under new rules that significantly increase the country’s share of the oil revenue.

This is according to Guyana’s vice president, who said this week that the government will offer 14 offshore blocks in its next auction, of them three deepwater and 11 shallow ones.

“We decided that to get the bids more competitive, we will allow locals and international companies to bid so there will be minimum technical and financial qualifications for the bids,” Vice President Bharrat Jagdeo said.

Per the new rules, the production-sharing agreements with the winning companies would see profits split on a 50:50 basis, plus a 10-percent royalty rate and 10-percent corporate tax rate, Reuters reported, citing an address by Jagdeo.

Currently, Guyana only gets 15 percent of oil revenues plus a 2-percent royalty rate, which has been criticized as too unfavorable for the country – one of the poorest in South America.

Also, there will be limits on how many blocks a company can be awarded, according to the government’s new plans for the oil industry. Although a company could bid for as many blocks as it wants, it would only be awarded a maximum of three.

The signing bonuses for the deepwater blocks were set at $20 million, and the bonuses for the shallow-water blocks at $10 million.

Guyana has become the new hot spot in global oil after Exxon and its partners Hess and CNOOC made a string of discoveries off its coast. The string continues, by the way, with Exxon announcing another two discoveries in late October.

This has brought the total since 2015 to more than 30 discoveries, with reserves in the billions of barrels. Production to date is 360,000 bpd, which is above design capacity, Exxon said in October. Plans are to boost this to over 1 million bpd by the end of the decade.

By Irina Slav for Oilprice.com

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