—PSA at risk if company misses end-of-July deadline

GHANA-based Cybele Energy Limited has until the end of July to pay its outstanding US$17 million signing bonus for Guyana’s S7 shallow-water petroleum block or risk losing its Petroleum Sharing Agreement (PSA), Minister of Natural Resources, Vickram Bharrat has warned.
Speaking on the Starting Point podcast on Saturday, Bharrat said the Government is prepared to suspend or cancel the agreement if the company fails to meet its contractual obligations by the deadline.
He revealed that Government lawyers are already engaging Cybele’s legal representatives in an effort to ensure compliance with the terms of the agreement.
“What we would have done is to get our legal folks, the legal firm representing us, to engage them and their legal team. So, right now, our legal team is basically in contact with them to ensure that they are in compliance with the agreement. Otherwise, we will have no other choice than to suspend or to cancel that agreement.”
Cybele, the first African company to be awarded an offshore petroleum block in Guyana, secured the S7 shallow-water block during last year’s competitive licensing round. Under the agreement, the company is required to pay a US$17 million signing bonus.
Bharrat said the company had informed the Government that payment was delayed because of difficulties involving one of its investors.
“They would have indicated to us that they’re having a few issues with their investor, but they’ve also indicated recently that they are signing a new agreement. I believe that, maybe as we speak, that agreement is being signed with another investor, and that they will be in a position to pay the signing bonus.”
According to the minister, the company requested an additional two to three weeks to complete the transaction. However, he stressed that the extension is not open-ended.
“…the ending of July will be the absolute cutoff date.”
Bharrat said the Government agreed to grant additional time because Cybele Energy has already demonstrated a commitment to establishing operations in Guyana.
He noted that the company has opened a local office, employed several Guyanese—including a young Guyanese woman as its country manager—and paid more than US$2 million in licence fees and other statutory charges.
“They’ve already paid over US$2 million in licence fees and other fees that are required of all oil companies that sign agreements with us.”
The minister said those investments, coupled with the Government’s desire to maintain investor confidence, influenced the decision to show some flexibility.
“Government, in a sense, [is] being a bit lenient because of these factors and because we want to show investors’ confidence too in government and in Guyana.”
“And because of that, some amount of leniency, I must say, would have been given to them.”
Bharrat nevertheless emphasised that the Government expects all petroleum companies to honour the commitments contained in their agreements and made it clear that the matter will not be allowed to remain unresolved beyond the end-of-July deadline.
A consortium led by TotalEnergies, and comprising QatarEnergy and Petronas, has already paid its US$15 million signing bonus for the S4 shallow-water block.
According to the minister, the consortium has commenced seismic surveys using specialised vessels that collect geological data beneath the seabed to determine whether hydrocarbons are present.
Bharrat explained that once the seismic data is analysed and favourable indications of hydrocarbons are identified, the company can determine where to drill exploration wells before eventually seeking approval for appraisal drilling and, potentially, production.
He said the availability of a specialised seismic vessel in Guyanese waters is particularly significant because only a limited number of such vessels operate globally.
Once TotalEnergies completes its work, the vessel is expected to undertake the Government’s multi-client 3D seismic survey programme covering other offshore blocks that may be offered in future licensing rounds.
“We are pretty confident that once this data is analysed and they show good signs of hydrocarbon, then they will move to the exploration programme, where they’ll start the exploration wells.”
Bharrat said the petroleum agreement governing the blocks provides significantly greater benefit for Guyana than previous agreements. He noted that it includes a 10 per cent royalty, a 10 per cent corporate tax and a reduced cost recovery ceiling, while maintaining a 50-50 profit-sharing arrangement between the Government and contractors.
He said these terms represent a marked improvement over those contained in the widely criticised Stabroek Block PSA, which was signed by the former A Partnership for National Unity and Alliance For Change (APNU+AFC) coalition government.