Govt, ExxonMobil still in talks on PSA terms for S8 oil block

As the Government prepares to sign new oil contracts with four companies for exploration activities offshore Guyana, President of ExxonMobil Guyana, Alistair Routledge says the company is still in talks with the Natural Resources Ministry on the terms for developing the oil block that it won in the 2022 bid round.

“We are continuing the discussions with the Government… in fact, just about a month ago, we made some further submissions to the Ministry of Natural Resources on the model PSA…We’re continuing a very constructive discussion about the terms in that model PSA,” Routledge shared during a press conference on Monday.

ExxonMobil and its co-venturers, Hess and CNOOC, won shallow-water oil block S8 in a bidding round launched in December 2022 and closed in September 2023.

A few weeks ago, the Minister of Natural Resources, Vickram Bharrat, revealed that sometime this month, the Government will be signing Production Sharing Agreements (PSAs) with four companies that won blocks during that bid round.

Six companies had bid on eight of the 14 blocks that were up for grabs. The other companies that were awarded blocks include a Guyanese female-led company, Sispro Inc; Total Energies EP Guyana BV, in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia); Liberty Petroleum Corporation of the United States, in partnership with Ghana-based Cybele Energy Limited; International Group Investment Inc of Nigeria; and Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and the Arabian Drilling Company of Saudi Arabia.

Since then, the Government has been in negotiations with these oil block awardees. But Minister Bharrat has since disclosed that the bidders with whom the Government will be signing PSAs are the consortium of TotalEnergies, Qatar Energy, and Petronas for block S4; International Group Investment Incorporated for blocks S5 and S10; Cybele Energy for block S7; and Sispro Inc. for block S3.

The new PSA includes updated measures to ensure that the country gets more benefits from new oil deals. These include the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate, the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from the previous 75 per cent while maintaining the retention of the 50-50 profit-sharing after cost recovery.

The 2016 oil contract for the Stabroek Block, signed between the ExxonMobil-led co-venturers and the then A Partnership for National Unity+Alliance for Change (APNU+AFC) Coalition Government for production in the oil-rich Stabroek Block, had been heavily criticised for low royalty, lack of ring-fencing provisions, and cost oil claims that saw Guyana losing billions.