By Svetlana Marshall

Minister of Natural Resources, Vickram Bharrat has announced that the Government of Guyana has finalized the new Production Sharing Agreement, and has retained all of its fiscal terms.  

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.

“That PSA has been finalized, I am happy to say that with no changes to the fiscal terms, with no changes to the fiscal terms. And you know the new fiscal terms, it is 10% royalty, it is 10% tax, it is 65% cost recovery as against 75%; and it is a 50-50 profit sharing. So, the 50-50 remains the same, the 10% royalty, 10% tax, 65% cost recovery, meaning that we will get more up front than the Stabroek Block Agreement,” Minister Bharrat said. 

At a press conference this afternoon, he said while the fiscal terms have remained intact, the work programme for every oil block may vary, based on the company. 

Minister Bharrat said now that the PSA has been finalized, the six bidders, who were awarded a total of eight (8) offshore blocks, are currently reviewing the agreement with the intention to signing off.

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 are the six companies that were successful in their bids.

“Today I am happy to say that every single one of those six companies – it is six companies, eight blocks because two companies bid for two [blocks] – every one of those six companies have submitted their applications to us, we have given them the PSA, they are currently reviewing that with the intent to sign and all of them have indicated that they are ready to pay their signing bonus, and you know for the shallow waters it is US$10M and for the deep water it is US$20M,” the Natural Resources Minister said. 

The Minister clarified that the Government is not prepared to sign any agreement in the absence of a signing bonus. However, he said the companies have assured that they have secured the signing bonus.

Minister Bharrat explained that while the Government was finalizing the agreement, the delay was largely as a result of challenges experienced by the bidders in locking in financiers and partners.

He said those challenges stalled negotiations.

“I know personally that it has taken longer than it should have but it is not totally the fault of the technical team at the ministry or anyone else. It is mainly because we had to work with the bidders, some of them, especially the locals were looking for international partners, they were looking for investors, they were looking for operators. So, we had to work with them. A few were ready but we can’t do a separate PSA for every different company,” the Natural Resources Minister explained. 

The Natural Resources Minister also said it was important to have a single PSA that was favorable to both sides. 

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