Guyana pauses upstream licensing to revise terms

Emerging oil producer Guyana has suspended upstream licensing until 2020 to update future contract terms, energy department director Mark Bynoe said.

The revised production-sharing agreements (PSAs) will be more attractive to oil companies and will increase the country's returns, Bynoe told reporters late last week.

Current contracts will not be affected, the government´s oil and gas adviser Matthew Wilks said.

The small country in northern South America has concluded PSAs with several foreign companies, most notably ExxonMobil that has made several discoveries on the deepwater Stabroek block since 2015. The US major plans to start producing 120,000 b/d in March 2020, ramping up to 750,000 b/d by 2025, surpassing fellow South American country Ecuador, an Opec member.

"We are designing a new model contract that will be used for future PSAs as well as elaborating a model toolkit to allow probabilistic scenario modeling of current and future PSA contracts," Bynoe said.

The energy department "is reviewing the current legal and regulatory framework for the petroleum sector, inclusive of the 1986 Petroleum Act, the shape and proposals for revision and possible replacement of some existing legislation," Bynoe said.

"The current PSAs may not be excellent but they are not very poor either, and contracts do evolve over time," he added.

Local business groups and the political opposition have questioned the contracts awarded to ExxonMobil and other companies, suggesting the government could have secured better returns.

ExxonMobil operates 6.6mn acre (26,800km2) Stabroek with a 45pc stake. US independent Hess holds 30pc, and the remaining 25pc belongs to Chinese state-owned CNOOC unit Nexen.

Other companies with offshore licenses include France's Total, UK-listed Tullow and Spain's Repsol.

Guyana's offshore acreage is part of the Guyana-Suriname basin that the US Geological Survey says contains an estimated 13.6bn bl of oil and 32 Tcf of natural gas.

Sparsely populated Guyana imports refined products from Trinidad and Tobago and the US to meet demand of about 12,800 b/d.