– Dennison says new types of contracts will be designed

TEMPLATES of oil contracts will be released at some stage of Guyana’s preparation for the oil-and-gas sector, which is set to begin production in 2020 when ExxonMobil commences production.

This was announced by Commissioner of the Guyana Geology and Mines Commission (GGMC), Newell Dennison, during a panel discussion on oil-and-gas development in Guyana hosted by Rice University’s Baker Institute, on Tuesday, February 26.
According to Dennison, the Department of Energy is working with Chatham House to improve contract agreements. The Royal Institute of International Affairs, commonly known as Chatham House, is a not-for-profit and non-governmental organisation based in London. Its mission is to analyse and promote the understanding of major international issues and current affairs.

“Templates will be out at some stage…there are considerations for competitive arrangements to create different domains”, explained Dennison.
Guyana is divided into two petroleum basins named Guyana and Takutu, respectively. The Guyana Basin is further divided into two basins, onshore and offshore.
Unlike the contract template for the Takutu basin, Dennison said the new contracts will not be a “one size fits all,” meaning the country will not remain exclusively in a Public Sharing Agreement (PSA).

In rating the 2016 Petroleum Sharing Agreement (PSA) signed with Esso Exploration and Production Guyana Limited partner of U.S. oil giant, ExxonMobil, Director of the Department of Energy, Dr. Mark Bynoe had said while the agreement may not be excellent, “it is not very poor.”

“Contracts are [placed] on a spectrum and they range from excellent to very poor. What we can say is that the current PSA may not be excellent, but it is not very poor either”, explained Dr. Bynoe.

In that regard, Dennison stated there must be some kind of hybrid arrangement for how the country deals with fiscal issues and in that sense, the new templates will have to incorporate restructuring of the legislation. “The templates will have less of the talk, because it will remove the complexity which would be found in the legislation instead,” Dennison further explained.

In addition to developing new contracts, Guyana will also be employing competitive bid rounds which will be open and transparent for those interested.
ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), is the operator of the Stabroek Block, holding a 45 per cent interest. Hess Guyana Exploration Limited holds 30 per cent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 per cent interest.

The Canje Block, located offshore Guyana east of the Stabroek Block, is also operated by EEPGL which holds 35 per cent interest, JHI 40 per cent interest and Mid-Atlantic 25 per cent interest.

The Kaieteur Block, located offshore Guyana to the north and adjacent to the Stabroek and Canje Blocks, is also operated by EEPGL, which holds 50 per cent interest. Ratio Energy Limited holds 25 per cent interest and Ratio Guyana Limited holds 25 per cent interest.
Tullow Guyana B.V and Eco (Atlantic) Guyana Inc are operators in the Orinduik Block. Eco (Atlantic) Oil and Gas Inc. has a 40 per cent interest in the Orinduik Block, while Tullow Oil has 60 per cent.

Although some of the blocks are occupied, Dennison said there is still room for joint venture activities and new ventures in unallocated areas.
International interest in Guyana peaked, after ExxonMobil revealed the country’s oil-and-gas prospects. First production from the offshore Liza field is expected in 2020, and full development could yield 500,000 barrels per day.