Excited by the fact that the Guyana-Suriname Basin has one of the largest and highest quality of light crude oil, government Friday invited oil companies from around the world to make their play on 14 new offshore oil blocks near where a consortium led by American supermajor ExxonMobil has successful drilled more than 30 wells in the past seven years in the South American republic.
President Irfaan Ali launched the bid round with much optimism saying that the period will run from Dec. 9 to the end of May next year, giving companies time to study data and the area in general. Visitors to the site must pay $20,000 to log into virtual data room that would provide them with information about the offshore area.
Guyana back in December 2019 became one of the world’s latest crude oil producers when Exxon, in consortium with Hess Oil of the US and China’s CNOOC produced the first oil from the Liza Field about 120 miles offshore and near the border with Suriname.
Not to be left out, Tullow Oil of France, Apache of the US and a number of others have made similar spectacular finds just across the marine border with Guyana as the two neighboring CARICOM bloc member states lead the way in the right for fossil fuel oils exploration.
The consortium is already producing oil from the Liza One and Two oilfields and has already won approvals from local authorities for a third to kick into operation by 2025. Current production is about 360,000 barrels per day but officials have said that this could be ramped up to about one million by 2027.
Bids must be sent in by mid-April and results and awards made by the end of May next year.
“This, of course, will follow negotiations and evaluation of the bids that we received during this bidding round,” the head of state said in a live Facebook post.
Cabinet has repeatedly said it will this time work to ensure that the country gets the best deal for what is widely regarded as its last remaining and revenue-producing economic patrimony — oil and gas. Criticism about the current arrangements with the consortium, the production sharing agreement and tax free incentives have received persistent and withering attacks from all quarters of Guyanese society.
The deal basically allows Exxon and its partners to recover 75 percent of its expenses from production, while splitting the remaining 25 percent with Guyana in addition to a two percent royalty. Activists want the royalty rate to climb to 10 percent. Government has refused to even attempt to renegotiate the arrangements but has said it will try to cash in on new agreements from the new blocks being offered for global bidding in the current round as the basin has been de-risked, proven and producing among the best sweet, light crude in the world.
Those awarded bids would have to agree to a signing bonus of $10 million for blocs in shallow waters and $20 million for deep. Eleven of the 14 blocks would be in shallow waters.