With questions being raised about some of the companies recently awarded oil blocks offshore Guyana, Vice President Bharrat Jagdeo today said extensive experience was not a prerequisite for the award of Guyana’s oil blocks.

Questions have been swirling around one of the companies that has been awarded two oil blocks.

The London registered, Nigerian company, International Group Investment Incorporated (IGI), was one of the companies recently awarded oil blocks.

While describing itself as a significant force in multiple sectors, it appears as though many of the company’s previous projects were short-lived, and it has no experience in oil and gas.

Vice President Jagdeo, while indicating that he does not know anything about the company or its directors, said the Government had long decided that extensive experience in the sector was not a requirement for bidders.

“When we were tendering, we decided, should we then put in a criterion that you should have great experience but if we did that, we will then exclude the locals and there was an argument that we had given the foreigners advantage and preferences in this lucrative industry and we are excluding [locals]. So, we decided deliberately and I explained right here that because the financial penalties are so severe, we will forego the experience because now they can go, once they pay their money upfront, they can choose to have partnerships with whomever they wish but the State will earn a significant amount of money. Secondly, there will be a short time period in which they can hold these assets and if they don’t do what they said they will do then there will be a penalty,” the Vice President explained.

The Vice President said while eight companies have been awarded oil blocks, those awards are not set in stone. He said the companies will be required to pay a signing bonus of US$10M in order to receive their exploration licence.

“They have to meet certain requirements. So, wherever they come from, if they are blue or they are green, and they come from Mars; if they come from Asia or Eskimo, and they put in a bid they have to meet some requirements. One of the requirements is that they have to pay a signing bonus of US$10M for an exploration licence. If they fail to pay that, they don’t get an exploration licence,” he said.

Additionally, the successful bidders will be required to submit a development plan for each block received.

“If they fail to implement the development plan, there is a massive financial penalty too. So, we are not assessing people based on nationality, it is the proposal. Did the proposal meet our requirements, and in the negotiations now, as we move from the award to finalizing the agreement, all of these issues would be verified. So, do you have the money now to pay us the signing bonus, to deposit US$10M in the Bank of Guyana – the Government’s account. If they say yes, they pass the first hurdle, if they say no, we have nothing more to discuss,” Mr Jagdeo emphasized.

The government is expected to meet the companies soon to discuss the agreements and the next steps.

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