The Government of Guyana today released the draft Model Petroleum Agreements for both the deepwater and shallow-water blocks paving way for the commencement of some 14 days of consultation.

According to the draft Model Petroleum Agreements, the Contractor will be required to pay the Government a royalty rate of 10% of all Petroleum produced and sold.

Further, under Article 36 (Cost Recovery and Profit Sharing), the contractor will be required to bear the costs incurred during its petroleum operations, however, that contract cost would be recoverable only from Cost Oil and or Cost Gas.

“All Recoverable Contract Costs incurred by the Contractor shall be recovered from the value, determined in accordance with Article 37, of a volume of Crude Oil and/or Natural Gas (“Cost Gas”) produced and sold from the Contract Area and limited in any Month to an amount which equals sixty-five percent (65%) of the total production from the Contract Area for such Month excluding any Crude Oil and/or Natural Gas used in Petroleum Operations or which is lost,” the draft document states.

Notably, the balance of the Crude Oil and or Natural Gas will be shared between the Government and the Contractor for each Field 50%-50%.

 However, while Article 35 of draft document specifies the need for a Signature Bonus, it does not include a proposed figure but indicates that the contractor will be required to pay the Signature Bonus within 15 business days of the contract signing.

In releasing the documents, the Natural Resources Ministry said proposed agreements are aligned with the ruling People’s Progressive Party/Civic (PPP/C) commitment to address deficiencies in the existing PSA.

“The Model Petroleum Agreements represent the PPP/C Government’s commitment to its manifesto promise of establishing a model production sharing agreement (PSA), guided by industry standards and best practices. At the core, these are aimed at maximising the socio-economic benefits for our nation without disincentivising foreign investors in the sector. The Government of Guyana remains committed to a new era of oil and gas development, characterised by a competitive and favourable investment climate,” it said.

It said too that the proposed agreements embody rigorous research and analysis by the ministry’s internal team, and external consultants on all topics relevant to a modern petroleum agreement for Guyana.

“The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context,” it said.

In an effort to ensure that the new investments are governed by a comprehensive framework of international best practices, the Model Petroleum Agreements will be followed by an overhaul of the 1986 Petroleum Act and Regulations, the Ministry said.

Feedback on the draft model agreements should be addressed to the Minister of Natural Resources and sent to [email protected] with the Permanent Secretary copied, [email protected].

“The indicative Guyana 2022 Licensing Round Schedule will be updated at www.petroleum.gov.gy/guyana-offshore-licensing-round-2022 and www.nre.gov.gy which will reflect the new timeline for the publication of the finalised Terms and Guidelines, Model Petroleum Agreement and process of bidding — all adjusted to facilitate maximum participation from global interest,” the Ministry said.

 The Government has placed 14 blocks up for auction, and according to the Natural Resources Ministry official Expressions of Interests (EoI) have been received for all of the blocks.

It said the interest shown is a clear indication that there is a global interest in Guyana’s shallow and deepwater offshore acreage.

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