IT is unlikely that Guyana will open another petroleum exploration licensing round before 2021 as several safeguards must be put in place to ensure the country gets the best out of all production activities.

Director of the Department of Energy (DE), Dr. Mark Bynoe, said on Monday that the country must first complete the revision of its Petroleum Laws, complete its own survey of the remaining oil blocks and examine the necessary Production Sharing Agreement (PSA) which applies to each block.

Regarding the first, he stated: “We will have to push back the issuing of any further licensing round to a later date and, the reason being, it would be foolhardy of us to rush ahead now that we are moving towards revising our laws to move towards another licensing round.”

The Department anticipates that the country’s Petroleum (Exploration and Production) Act 1986 will be replaced, amended or supplemented and has signed a contract for its review with American law firm, Hunton Andrews Kurth LLP and local law firm, Cameron and Shepherd. A sum of $1.2M has been supplied by the World Bank to cover the one-year contract for consultancy and the provision of legal advice to the DE on all matters.

“The 1986 Act is not currently fit for purpose in 2019, for example, it is extremely silent on gas, and we do recognize that associated gas remains a significant discovery for Guyana going forward,” Dr. Bynoe had explained a few months prior.

Together, the firms are expected to focus on a wide range of regulations pertinent to the sector such as legislation for local content, legislation to govern downstream and midstream activities, regulations for the Environmental Protection Agency (EPA) and more. Dr. Bynoe said that the joint venture accentuates the DE’s commitment to the practice of local content which also ensures that local expertise is bolstered over time.

Meanwhile, the procurement process is almost completed for the conduct of 2D and 3D seismic surveys of Guyana’s maritime boundaries to ascertain what petroleum valuables lie within.
“[We must] be able to ascertain what prospectivity there may be as well as what shapes these blocks should have. That needs to be in place before we go to any oil licensing round, otherwise you’re licensing blindly,” he explained.

The DE has also made it clear that it will not be returning to another licensing round with its old PSA and has therefore crafted a Best Practice Production Sharing Agreement Template to guide future PSAs.

It will guide the crafting of Production Sharing Contracts (PSCs) to be applied to different investment climates. “So, for example, if you are investing in deep water with all the risks that that take, that would be a different investment climate to investing offshore and the same for the near shore. So you could very well have three subtly different PSC (Production Sharing Contract) structures for different investment environments,” DE Energy Adviser, Matthew Wilks had explained in 2019.

The template also addresses best practices when dealing with issues such as royalties, profit sharing and occupational health and safety. “All of these are other elements before we go to another licensing round that we would wish to see in place so that when we go to another licensing round we are going with a complete package,” Dr. Bynoe said.