Gov’t not likely to host second oil auction before 2025 elections – Dr Jagdeo says

Given the anticipated market turbulence during the upcoming elections season, General Secretary of the People’s Progressive Party, Dr Bharrat Jagdeo has said it is unlikely that the government will return to auction for oil blocks before the 2025 elections are held.

“In some of these markets, they jump up a long time now as though elections are next two months. It’s going to be towards the end of next year. But…I doubt whether we go to another auction before the elections,” he told reporters at a press conference at Freedom House on Thursday.

Dr Jagdeo recognised that the first time Guyana went to a public auction, certain systems were not in place that would have optimised the results.

This includes a new Product Sharing Agreement (PSA), a new Petroleum Activities Act and seismic studies.

“You would recall when we went to auction, we made a commitment that…before we finalise the auction, we will make those available to the companies that were going to participate in the auction. It took us a long time, given their complexity, to finalise those two seminal pieces of policy which resulted in us having to postpone or extend the completion of the auction several times,” the GS said.

Now, the model PSA imposes a minimum signature bonus requirement of US$10 million for shallow water and US$20 million for deepwater blocks. It also includes a 10 per cent royalty rate and 65 per cent cost recovery ceiling.

In the next round of auction, Dr Jagdeo assured that these documents will be immediately available to participating companies.

“We had gone to the auction with a very limited amount of seismic data. We have received bids from several companies that have made proposals to do seismic studies and then at no cost to the government,” he reminded.

Seismic data is important in oil and gas exploration as it creates a three-dimensional image of what lies beneath the Earth’s surface. This makes it easier to pinpoint potential locations of oil and gas reserves.

He said that with these three measures in place, the government anticipates that future auctions will yield better results.

Last year’s auction concluded with 14 oil blocks on offer within the country’s shallow and deep-water areas.

During the bidding round, eight blocks were shortlisted based on the bidders’ ability to meet the criteria of the expected work programme and the required financial commitments.

Six companies were awarded oil blocks, among them a woman-owned Guyanese company, Sispro Inc., which secured two blocks.

Other blocks were awarded to Total Energies, in collaboration with Qatar Energy International and Petronas, International Group Investment Inc. and Montego Energy, Liberty Petroleum Corporation, Cybele Energy Limited, Stabroek Block partners: ExxonMobil Guyana Limited, Hess New Ventures Exploration Limited, and CNOOC Petroleum Guyana Limited, as well as Delcorp Inc. Guyana, which comprises Watad Energy and Communications Limited and Arabian Drilling Company of Saudi Arabia.