Government on Friday released its petroleum agreement signed by Natural Resources Minister Raphael Trotman in 2016 with Tullow Guyana BV and Eco (Atlantic) Oil and Gas, Inc.
According to the Natural Resources Ministry, the terms of the contract are the same as those for Esso (Exploration and Production) Guyana Ltd and partners Hess and CNOOC Nexen and CGX.
Similar to the CGX contract that was signed in 2013, when no oil deposits were discovered, Government agreed to a one per cent royalty. In addition, a 53 per cent share of profit oil and gas; after recoverable costs have been satisfied was negotiated.
Moreover, Government has agreed to stand the cost of all the company’s income taxes while exempting the contractors from the Property Tax Act, Value Added Tax and Corporation Taxes.
However, the two contracts (CGX and Tullow/ Eco Atlantic) differ when it comes to the amount the contractors will pay Government on the annual Licence rental charge. CGX in its Production Sharing Agreement is required to pay US$100, 000 for every year the licence remains in force, while Tulllow/Eco oil is only required to pay US$40, 000.
The Production Sharing Agreement also stipulates that all recoverable contract costs be recovered from the value of a volume of crude oil produced and sold from the contract area in any month to an equivalent amount of 75 per cent of the total production.
Tullow Oil, parent company of Tullow Guyana BV is an oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana.
Meanwhile, Eco (Atlantic) Oil and Gas, Inc was incorporated in January 2011 as Eco Oil and Gas Limited as a small independent international oil and gas exploration company based in Toronto, Canada.
The signed agreement, sees Eco (Atlantic) Oil and Gas, Inc having a 40 per cent interest in the Orinduik Block while Tullow Oil has 60 per cent.
In February of this year Eco Atlantic and Tullow revealed that the Orinduik Block offshore Guyana could potentially contain in excess of 1 billion barrels of oil equivalent.
The Orinduik Block is located up dip and just a few kilometers from ExxonMobil’s recent Liza and Payara discoveries confirming, by Exxon’s estimates, in excess of 1.5 billion barrels of recoverable oil.
Eco Atlantic and Tullow had said in a release that leads are up dip from the Liza discoveries located on the Stabroek Block and are currently being evaluated and matured to prospect status on recently acquired 3D survey data.