Exploration license for new oil blocks to be issued this year -Natural Resources Minister

Exploration license for new oil blocks to be issued this year  -Natural Resources Minister

Two years after the Government launched a competitive bidding process for 14 offshore oil blocks, it is still to issue a single exploration license. 

In late 2023, one year after the auction was launched, the Government awarded eight of the blocks to a total of six bidders – TotalEnergies Consortium, which includes Qatar Energy and Petronas; Sispro Inc.; International Group Investment Inc. and Montego Energy; Liberty Petroleum Corporation and Cybele Energy; ExxonMobil, Hess and CNOOC; and Delcorp Inc, Watad Energy and Arabian Drillers. 

However, disagreements over the non-fiscal terms in the new model Production Sharing Agreement (PSA) have stalled the issuance of the exploration license. 

At a press conference earlier in the week, Minister of Natural Resources Vickram Bharrat apologized for the delays in issuing the exploration license for the blocks awarded. 

“I want to personally apologize because, I agree with you, we should have concluded at least some of the agreements with regards to the bidding round. It has taken a long time but what we wanted, and I think the Vice President did mention it, we wanted a PSA that applies to all the bidders,” Minister Bharrat told reporters. 

Four of the companies – TotalEnergies Consortium, the International Group Investment Inc, Cybele Energy Limited and Delcorp Inc, have all accepted the Production Sharing Agreement.

Meanwhile, ExxonMobil and its partners Hess and CNOOC have not accepted the new PSA, and are currently reviewing it. Exxon has long expressed concern about the non-fiscal terms in the PSA.

Minister Bharrat told reporters that is important to have all of the companies agree to a single PSA, which can be used as model for future agreements. 

“We haven’t been able to conclude a PSA that is accepted by all the bidders. And we don’t want to be in a position, where we have a PSA for different companies. That is not the ideal position to be in,” the Natural Resources Minister said. 

Under the new model PSA, the royalty on all petroleum produced and sold by the contractor has been increased from 2%, as embedded in the Stabroek Block PSA, to 10%.

It 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 a time.

Minister Bharrat has assured that the exploration license for the new blocks will be issued in 2025, however, he was not able to give specifics. He said too that it was not likely that there would be a second auction this year.

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