…contingent on level of production

Repsol Exploration Guyana is on schedule to drill its first exploration well in 2019 in the Kanuku Block to determine if hydrocarbons are present. If its exploration is found to be feasible, the country could benefit from as much as 60 per cent in oil profit, according to a Petroleum Agreement signed between the Government of Guyana and Repsol Exploration S.A.

Present in Guyana since 1997, Repsol is an international energy company, with branches in 37 countries. Its operations include exploration, production, refining, chemicals, retail sales and the development of new energy solutions. The company’s mission is to provide energy safely and responsibly, and build a more sustainable energy future.

Last Wednesday, Director of Global New Ventures, Mikel Erquiaga and a team of officials met with Natural Resources Minister, Raphael Trotman. During that meeting, the company reiterated its commitment to its Guyana operations, disclosing that an aggressive programme of activities is in the pipeline that would move swiftly from seismic surveys to exploratory drilling.

“The company is targeting an oil prospect in the Kanuku blocks, where it plans to drill the first exploration well in 2019 to determine if hydrocarbons are present. The internal and external ESHIA (Environmental, Social and Health Impact Assessment) process will begin in 2018,” the Natural Resources Ministry said in a statement late Sunday night. Kanuku Block is located 150 kilometers offshore Guyana.

Also on Sunday evening, the Ministry, in keeping with its commitment to release major contracts between the Guyanese Government and companies in the petroleum sector, released a Petroleum Prospecting License issued to Repsol Exploration Guyana S.A and Tullow Guyana B.V on May 14, 2013, in addition to a Petroleum Agreement between the Government of Guyana and Repsol Exploration.

According to Article 11 – Cost Recovery and Production Sharing – of the Petroleum Agreement, Guyana stands to benefit from as much as 60 per cent in oil profit.
Based on the agreement, the contractor will bear and pay all contract costs incurred in carrying out Petroleum Operations, and will recover same only from Cost Petroleum.
“All Recoverable Contract Costs incurred by the Contractor shall, subject to the terms and conditions of any agreement relating to Non-Associated Gas made pursuant to Article 12, be recovered from the value, determined in accordance with Article 13, of a volume of Petroleum (hereinafter referred to as “Cost Petroleum”) produced and sold from the Contract Area and limited in any Month to an amount which equals seventy-five percent (75%) of the total production from the Contract Area for such month excluding any Crude Oil and or Natural Gas used in Petroleum Operations or which is lost,” a section of Article 11 explains.

It was noted if the Recoverable Contract Costs, in any month, exceed the value of Cost Petroleum, the unrecoverable amount will be carried forward, and recovered in the subsequent month.

The balance of the Crude Oil and or Natural Gas, according to the agreement, will be shared between the Government and the Contractor in varying proportions.
For the first 20, 000 Barrels of Oil Per Day (BOPD), the contractor and government will both received a 50% share of the profit while for the next 20, 000 BOPD, Government will receive 52.5% of the profit while the contractor will receive 47.5%. For the third set of 20, 000 BOPD, the country is in line to receive 55% share of the profit while the contractor will receive 45%. By the fourth batch, the country will be receiving a whopping 57.5% of the shares while the contractor will receive the remainder. Once the BOPD exceeds 80,000, Guyana, according to the agreement, will receive 60% with the contractor receiving 40% of the profit.

Contracts entered into with ExxonMobil and its joint-venture partners, HESS and CNOOC Nexen, Ratio Guyana Inc., Tullow Guyana B.V and Eco (Atlantic) Guyana Inc and CGX Energy are among those that have been released to date and are on the ministry’s website.