Government hopes to conclude negotiations on oil blocks with bidders by year end -Jagdeo

Government hopes to conclude negotiations on oil blocks with bidders by year end  -Jagdeo

The Government is hoping to conclude negotiations for eight of the oil blocks that attracted bids before the end of the year.

The negotiations will include the six bidders that submitted a total of 14 bids for eight of the 14 offshore blocks that were put up for public auction.

Groups formed by Exxon Mobil and Total Energies, Exxon, Hess Corp and China’s CNOOC as well as Total Energies, Qatar Energy and Malaysia’s Petronas are among the bidders.

Pressed for greater details at a party press conference at Freedom House on Thursday, the Vice President Bharrat Jagdeo said it is important to allow the process to work.

“We have to now allow the process to work. The evaluation would be done. We’re anticipating in early October to finish the evaluation then to move on to discussion to conclude the agreements before the end of the year,” the Vice President told reporters.

Six of the oil blocks offshore Guyana did not attract any bids.

Like President Irfaan Ali, the Vice President said that the Government is extremely pleased with the response to the bidding process.

He said the oil blocks were placed up for auction, at a time when there are increasing calls for the world to significantly reduce its dependency on fossil fuel. 

“Globally, we have a move now to net zero and with all of its attendant consequences, the key of which is the decarbonization of many activities from the oil majors, in fact the sell off of their assets in exploration and production in many parts of the world. Two, the inability to raise financing for activities related to the fossil fuel industry, and then three, which is, not related to net zero, but the large number of countries now that have bid rounds, so, that’s on the external side, we have these three factors,” he reasoned.

According to Mr. Jagdeo, the terms and conditions outlined in the new Production Sharing Agreements (PSAs), that would govern the development of the oil blocks, are different from the old PSA.

“So, the royalty rate has oved from 2% to 10%; effectively we are ring fence because the blocks are small; three, we have a 10% corporate tax when there was none in the past, and four, we have capped cost recovery at 65%. We have included in the new PSA larger sums for training, and safety requirements,” Mr Jagdeo explained.

He said the new Petroleum Activities Act also mandates the submission of work plans and budgets as well as stiff penalties, should there be any breaches.

It was further explained that if the auction was done using the old Production Sharing Agreement and Legislation, all 14 blocks would might have attracted submissions of interests.

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