Negotiations with companies awarded oil blocks to start next week

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With the aim of fast-tracking exploration activities, the People’s Progressive Party/Civic (PPP/C) Government is looking to commence negotiations next week with the companies that were awarded oil blocks from the recent bid round auction.

This was revealed by Minister of Natural Resources, Vickram Bharrat, during his end-of-year press conference on Tuesday. According to Bharrat, the Government has already written to the six companies and groups, formally notifying them of the award and informing them of the impending start of negotiations.

Minister Bharrat pointed out that the companies have already indicated their readiness to start exploration work and cover the cost of the signing bonuses every new oil company must pay – US$10 million for shallow water and US$20 million for deep water. According to Bharrat, the Government intends to hold them to this.

“We’ve officially written to them and indicated that we’re going to start the negotiations as early as next week. So, we will update you further as to the progress of those negotiations. We’re hoping that the negotiations will go well. And all the companies can be awarded those blocks provided that, one, they’re in a position, which they’ve already indicated, that they can pay the signing bonus.”

“The second main criterion is the work programme. And the resources to ensure they can carry out that work programme. Because we’re very serious about the work programme. And these companies have already submitted a work programme. So, they’ve already agreed to it in principle. So, nothing should change from the work programme they submitted to us.”

In the event that companies cannot fulfil the work programmes they submitted to the Government, Bharrat noted that there would be “stiff penalties”. As it is now, he noted that further talks must be held between the Government and these companies on these work programmes.

“We want exploration activities to take place as soon as possible. We know that they have to do seismic and other studies because we would have auctioned the blocks with limited data that was available. And not conducting any seismic, which would have cost considerable resources. And take some time to get it done as well,” Bharrat explained.

Meanwhile, the Minister also addressed any misconceptions about the locations of the new blocks. While Venezuela, which is claiming two-thirds of Guyana belongs to them, has accused the Government of misconduct by awarding blocks in Guyana’s own Exclusive Economic Zone (EEZ), Bharrat made it clear that none of the blocks are in disputed waters.

“I know the question has been asked. And there are some concerns about the new blocks that were awarded, being in disputed areas. We don’t have any dispute in terms of our boundaries. It is Venezuela that has a controversy with us, claiming part of our country. But I want to assure you that none of these blocks are anywhere close to that area they claim to have the controversy, or above the 70-degree line.”

“And as you would have noticed, that is why we haven’t committed, or Exxon as well, to do any exploration activities north of the Stabroek Block, going above the 70 degrees, going closer to Venezuela. Most of the exploration activities are going southwards to Suriname,” Minister Bharrat said.

According to the Minister, Exxon had asked the Government for permission to conduct these exploration activities and after consultations with the Ministry of Foreign Affairs, the advice given was to wait for the International Court of Justice (ICJ) to rule on the border controversy with Venezuela.

“The Ministry of Foreign Affairs advised that we should wait on the Court’s decision, which is the sensible thing to do. And we have so advised Exxon. Exxon has not done any exploration in that part of the block. Likewise in the Roraima Block and parts of Kaieteur,” he further explained.

Of the blocks that were awarded during the bid round, Guyanese female-led company Sispro received a shallow block (S3) and a deep-water block (D2), from the auction of the blocks offshore Guyana. Other shallow blocks were awarded to Total Energies EP Guyana BV in consortium with Qatar Energy International E&P LLC and Petronas E&P Overseas Ventures SDN BHD (Malaysia), which got Block S4; Liberty Petroleum Corporation of the US and Ghana-based Cybele Energy Limited, which got Block S7, and International Group Investment Inc of Nigeria, which got two blocks – S5 and S10.

Another shallow block, S8, was awarded to the Stabroek Block partners – ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited.

The second deep-water block – D1 – was awarded to Delcorp Inc Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.