President of ExxonMobil Guyana, Alistair Routledge announced today the oil company is still locked in discussions with the Government of Guyana on the new Production Sharing Agreement (PSA), that is intended to govern the oil blocks that were placed up for auction in 2022.

ExxonMobil and its partners Hess and CNOOC are among  six companies that were awarded a total of eight oil blocks. However, ExxonMobil has not agreed to the new PSA over concerns about the non-fiscal terms included in the model agreement.

At a press conference today at his Kingston Office, Mr. Routledge told reporters that those talks are still ongoing, but stressed that the proposed agreement must “incentivize investment” in the blocks.

“I really don’t want to speculate, are we near or we not near, I think the important thing is we continue to have that discussion in a collaborative way to try to find an agreement that works for all parties, that incentivizes the investment, incentivizes taking the risk because of course these are blocks with no discoveries, so you are having to take the exploration risks, investment money and not know whether you will ever make any money back or recover your costs. It has to be an agreement that incentivizes the investment, which is what the country wants but also returns a reasonable sharing of any profit that may flow in the future, should there be economic discoveries,” he said.

Under the new model PSA, the Royalty on all petroleum produced and sold by the contractor has been increased from 2% to 10%.

The Agreement also includes the retention of the 50-50 profit sharing after cost recovery, however, a company would not be able to recover more than 65% of the cost at any time.

The Ministry of Natural Resources earlier this month said a minimum of four Production Sharing Agreements will be completed and signed this year.

The four blocks would be S4 to TotalEnergies, Qatar Energy, and Petronas; S5 to International Group Investment Inc.; S7 to Cybele Energy; and S10 – International Group Investment Inc.

Sispro Inc., and Delcorp Inc. are among the other companies that were awarded the new blocks in addition to Exxon.

The Natural Resources Ministry said the government remains committed to ensuring that the development of the oil and gas industry is conducted in a manner that is both transparent and beneficial to the country as a whole.

Related posts:

Exploration license for new oil blocks to be issued this year -Natural Resources Minister Government finalizes new Production Sharing Agreement for oil sector; Royalty rate increased from 2% to 10% No “watering down” new Petroleum Sharing Agreement to suit Exxon -Jagdeo Government has no interest to renegotiate existing ExxonMobil contract -President tells Energy Conference