The Government of Guyana has identified 14 oil blocks that will be auctioned in the nation’s first-ever competitive offshore oil and gas licensing round, expected to be concluded by the end of Q1 2023.
The country’s Ministry of Natural Resources has revised the fiscal terms that will guide all future offshore investments for projects that reach the production stage.
Under the new agreement model, the royalty rate has been increased from 2% to 10%. The current 75% cost-recovery ceiling has been lowered to 65%. Profit sharing after cost recovery remains the currently applied 50/50 for the contractor and the government. These new terms have doubled Guyana’s share from 14.5% to 27.5%, supplemented by the newly introduced 10% corporate tax.
“These incentives are expected to attract major international oil companies with the necessary finance and expertise to expedite the prospecting and development of oil discoveries within the shortest possible time frame,” said Minister of Natural Resources Vickram Bharrat. “This is in keeping with the government’s vision to increase the extraction of petroleum resources to satisfy global demands, while at the same time utilising earnings to strengthen Guyana’s non-oil sectors for a robust and stable economy.”
Of the 14 blocks – ranging from 1,000 square kilometres to 3,000 square kilometres – 11 are located in shallow water, while the remaining three can be found in ultra-deep water. Oil companies participating in the auction will be required to pay a minimum of US$10m for shallow blocks and $20m for deep-water blocks.
There will be no restrictions on how many bids a company may submit; however, each successful bidder will be limited to an award of three blocks.
