–as efforts intensify to advance development in the oil and gas sector

AS government works to develop the oil-and-gas industry for the benefit of all Guyanese, President Dr Irfaan Ali on Friday officially launched the first auction for the development of 14 new oil blocks.

In a live address on the Office of the President’s Facebook page, President Ali said that the government hopes to award the contracts by the end of May, 2023.
“Today, 14 such blocks will be placed on auction and we’re hoping that the course of the submission of the bids will be on the 14th of April, 2023 and our timeline is to have contracts awarded by the end of May, 2023,” he said.

President Ali said that the 14 blocks for tender will be in shallow-water and deep-water areas combined.
“As we’ve continuously stressed, we have a situation where there is a timeframe on oil-and-gas development. We understand the direction in which the world is going, so it’s very important for us to have developers who are serious, who will expeditiously move towards the development of the oil-and-gas resources,” he said.

He added that once the bidder does not fulfil their obligation, the process of relinquishment will take effect. This is “where you will have to hand back the block to the government is made stronger and more expeditious,” he explained, before adding that government has done a lot of work to create a balance in the sector.

“We have improved fiscal terms that provide a greater balance of the shared revenue between the government and contractor, while maintaining Guyana’s competitive edge in the region and globally,” he noted.

He said this is another key feature because government understands that the cost of capital for oil-and-gas exploration and development is going up and that access to capital has become more cumbersome.

“So, we have to ensure that there is a balance in what we do… that is, the government gets the best possible deal in terms of revenue, but at the same time, while we focus on getting the best possible deal in terms of revenue for the government, that Guyana’s competitive edge is not reduced,” he said.
President Ali added: “I’m very pleased to say that the conditions and requirements provide that balance where the country’s competitive advantage in not threatened and at the same time, the greater balance of the share of revenue comes between the government and the contracts.”

He reiterated the government’s promise that there will be a transparent process that imposes minimum qualification criteria that reflects international best practices and expertise and capital requirements necessary to conduct exploration and production activities in shallow and deep-water areas respectively.

“As you’re aware, there are different requirements for shallow-water and deep-water operations. There are different types of expertise that are required for shallow-water and deepwater. There are different types of capabilities that are required for shallow water and deep water,” the Head of State said.

He added that there are separate requirements for qualifications to participate in the deep versus the shallow-water blocks. A higher bar has been set for the deeper areas.
“As I said, the deeper areas are more complex. The deeper area requires stronger capabilities and as a result of that, there are strong requirements, qualification requirements; the bar is quite high in relation to deep-water exploration,” he noted.

President Ali said that they have made it very clear that there is a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deep-water blocks for tender.

Additionally, there is a participation fee of US$20,000 for the bidding process for each block.
“In order to gain access to the virtual data room and participate in the competitive bidding process… there is a virtual data room that will be launched simultaneously and there is a participation fee of US$20,000 that will give you access to that virtual data room for you to participate in this competitive bidding process,” he explained.

He noted that the offshore basin has captivated the attention of the global oil market participants and has called a gateway to the world’s fastest-growing super basin over the last four years.
“Guyana’s offshore [fields] are estimated to have potential resources in excess of 25 billion barrels and estimated reserves in excess of 11 billion barrels,” President Ali said.