Caribbean Community headquarters nation Guyana, already enjoying a cash bounty from the mid-2015 discovery of offshore oil and gas, could be even wealthier in the coming months if an international consortium planning to explore offshore shallow water blocks hits the proverbial ‘jackpot.’
Comprising France-based Total Energies, Petronas of Malaysia, and Qatar Energy, the consortium and Guyanese authorities signed off on a petroleum agreement with the group on Tuesday under new and revised terms linked to production sharing, a new tax regime, and reduced revenues being made available for cost recovery.
The group also plans to offer a $15 million signing bonus to the government as it prepares next year to explore the S4 block, which comprises approximately 700 square miles in relatively shallow waters.
The group’s exploration will be the first by any consortium under the new fiscal arrangements established by authorities over the past three years.
Companies are now required to pay a 10 % royalty instead of 2 %, and a 10% corporate tax. The 75 % of revenues set aside previously for cost recovery by producers has been reduced to 50, allowing for more cash to be split between the two parties.
Guyana’s oil and gas industry commenced production at the end of 2019, with American supermajor ExxonMobil leading a group that included Hess Oil, which Chevron and China’s CNOOC have since replaced. Today, daily production is around 900,000 barrels of oil from four oil fields.
That group is the only current producer in Guyana. Team members say they are anxious to get going.
“We want to go fast, we want to explore this basin as soon as we can. We have five years to do it. We are very aware of the penalties. We will not need those penalties. We are here to explore,” said Daniel Larranaga, Total’s Vice President at the signing ceremony.
Minister of Local Resources Vickram Bharrat said the two sides had been working for several months on a deal, which has finally come to fruition, noting that “I want to also thank the three companies that have worked with us over a prolonged period to ensure that we get it right so that we can have an ideal petroleum agreement that is acceptable by both parties and that would bring benefits to Guyana and Guyanese.”
The Guyana section of the prolific Guyana-Suriname Basin is reported to contain at least 11 billion barrels of oil so far. Exxon and its partners plan to operate about seven oilfields by 2030, taking production well past one million barrels daily and making Guyana the highest per capita production nation on earth.
Guyanese officials had launched a bid round in 2022 for 14 blocks, with six companies, including an all-Guyanese consortium, submitting bids for allocation. Officials say that four agreements are ready for signing with the group led by Total, being the first.
