Guyana to seek bids for oil blocks in policy change

Guyana is changing how it concludes agreements with international oil companies for hydrocarbon exploration and will launch bidding rounds for offshore and onshore acreage, the South American country's president Irfaan Ali said.

Exploration and production contracts granted to several oil companies so far have been based on direct negotiations by the government with interested firms.

"It will now be a public and open bidding process in which we will be looking for the best offers," Ali said in a 7 May press conference.

The first bidding round will be launched by "early 2022" after the government completes a revision of the terms of current production sharing contracts, government officials told Argus.

The launch of the bidding rounds will also be preceded by a change in the regulatory structure of the country's oil sector, with the creation of a petroleum commission that will be the country's main oil authority, the officials said.

Companies that were granted blocks in direct negotiations with the government include US major ExxonMobil, which started production from the deepwater Stabroek block in December 2019. Its partners include US independent Hess and Chinese state-owned CNOOC unit Nexen.

Production of 32.1°API Liza crude is 100,000-111,000 b/d, and is projected to reach 750,000 b/d in 2026.

ExxonMobil also has an operating interest in the Canje Block, along with partners France's Total, Canadian junior JHI and local company Mid-Atlantic Oil & Gas. The block is adjacent to and east of Stabroek.

The US major is also the operator for the Kaieteur Block that lies north of Stabroek. The consortium includes Canada's Cataleya Energy, Israel's Ratio Energy and Hess.

Both the Canje and Kaieteur blocks are still in the exploration stage.

Other companies with exploration permits include the UK's Tullow Oil, Spain's Repsol, Qatar Petroleum, and Canadians CGX Energy, Frontera and Eco Atlantic.

"Although there has been local and foreign criticism of the contract to the ExxonMobil consortia as being too generous to the companies, the critics have to understand that these companies were pioneers in unrisked acreage," a Guyanese official told Argus.

"Now that Guyana's potential is derisked and highly prospective through the significant finds by ExxonMobil, newcomers that will be winning bids will be prospecting with a greater degree of certainty, the official said. "The revised contract terms will reflect this new situation."