Chairman of the Private Sector Commission (PSC), Mr. Ramesh Dookhoo, at a recent press briefing, said the operations of Takutu Oil and Gas Inc. are expected to increase economic activity in Lethem in Region Nine (Upper Takutu/ Upper Essequibo). Dookhoo noted that a private sector team, during a recent visit to Lethem, met with the rig’s operations manager and prospects are positive.
He related that according to the manager, once operations are kicked into full gear, some 120 persons are expected to work on the rig – persons from several countries, including neighbouring countries.
The Takutu Oil and Gas Inc. operation is based approximately 1,000 yards away from the closed-off Home Oil well, which reportedly found oil, but could not reach an agreement with the previous administration regarding its extraction. In 1982, Home Oil had discovered high quality crude oil in Karanambo, some miles from Lethem.
“They (Home Oil) had to cap the well and leave Guyana…1,000 yards from that well another well is to be dug by Takutu Oil and Gas Inc…the chances of finding oil are very high,” Dookhoo said.
The PSC Chairman reiterated that the presence of Takutu Oil and Gas Inc. in Region Nine spells positive changes for the region, which is quickly developing into an economic hub in its own right.
Prime Minister Samuel Hinds, in a meeting with the Parliamentary Sub-Committee on Natural Resources last November, had indicated that in the next 12 months there would be an increase in oil and gas exploration activities.
According to him, drilling is expected to be done in several areas: one drill is expected to be in Takutu, Region Nine (Upper Takutu/ Upper Essequibo); two CGX Energy Incorporated drills near the Suriname border, one early in 2011 and another subsequently among others.
This interest, the prime minister informed the Committee, comes after assessments by the US geological survey on the Guyana Basin, which revealed that the potential for oil discovery is very high, given that the location is the second most prospective under-explored area worldwide.
Estimates are that were an oil discovery to be made in the Guyana Basin, production targets would be estimated at 50 million barrels per year, which would be equivalent to 140,000 barrels per day. Additionally, government would be receiving a cash flow of 53 per cent, and the oil company 43 per cent.

Prospecting
Interested companies that qualify will be granted General Petroleum Prospecting Licences.
The General Petroleum Prospecting Licence, Hinds said, is a standard document; and once natural resources are discovered, there is a product- sharing agreement that comes into play.
The prime minster explained that this assigns a portion of the product to cover cost, and the remaining, which will be profits, will be split between the company and the government.
This product-sharing agreement, according to him, is also standard.
According to him, the prospecting explorations cost between US$50 and US$100M, and he added that the government and the Guyana Geology and Mines Commission (GG&MC) have been operating on a first-come first-served basis.
The prime minister noted that the current administration, in light of the increase in prospecting activities for oil and gas, is looking to go the way of bid bonds, which are guarantees that a contractor will enter into a contract if awarded the bid.
Hinds explained that in 1980 this did not work because there was not much interest; but now that there is a growing interest,  it is the way to go.
In addition to Takutu Oil and Gas Inc., several other companies are currently engaged in exploration for natural resources, including ESSO, Petroleum Geo-Service, CGX Energy Incorporated and ON Energy Inc.
Since 1917, there have been 24 wells drilled. These include 11 offshore, three in the Takutu area and another 11 in more coastal areas.
In March last, Coordinator for International Energy Affairs of the US Department of State, David Goldwyn, met President Bharrat Jagdeo at State House to discuss the proposal which will include the provision of technical assistance to empower countries to wisely manage resources and revenue generated from oil and gas.
The United States is in the process of working on a proposed Energy Governance and Capacity Initiative (EGCI) for countries on the verge of becoming oil and gas producers for the next decade.
Guyana is on the list of such countries and the consensus among sector stakeholders is that the country has much potential.