Photo: Liza Destiny FPSO operating off Guyana (for illustration purposes); Source: ExxonMobil

14 blocks up for grabs in Guyana’s first offshore oil & gas licensing round

The Guyana 2022 licensing round has been launched by the country’s Ministry of Natural Resources, offering 14 blocks for bids in the shallow and deepwater areas.

While announcing this licensing round, Guyana’s government explained that this is being done “for the very first time,” and marks a new era of oil and gas development, characterised by “a competitive and favourable investment mechanism and improved socioeconomic benefits for our nation.”

Furthermore, the country’s government reaffirmed its commitment to “a balanced approach” of fast-tracking hydrocarbon developments while advancing environmental protection, and ensuring that “Guyanese derive the maximum economic benefits” of its petroleum potential.

Moreover, the bidding round process, which was officially launched with the publication of the notice given under the Petroleum (Exploration And Production) Act, in the Official Gazette by the Minister of Natural Resources on 9 December 2022 is expected to close with the submission of bids on 14 April 2023.

Guyana explained that contract awards are expected by 31 May 2023, following the evaluation of bids and negotiation process, as confirmed in the indicative terms and guidelines for the bidding round. The country’s Ministry of Natural Resources has posted separate requirements for qualification to participate in bids for deepwater and shallow water blocks, setting the bar higher for deepwater areas.

Guyana’s authorities say that this reflects “the capital-intensive nature” of deepwater exploration and production (E&P) and “the highly specialised technical competence” required for deepwater E&P activities. The country has set the minimum signature bonus requirement of $10 million for shallow water and $20 million for deepwater blocks.

Guyana’s ministry elaborated that the minimum work commitments specified for the initial and renewal periods of the prospecting licence consist of a combination of seismic and drilling of exploration wells with the fulfilment of prior commitment as a precondition to enter into the subsequent renewal periods.

Guyana’s Ministry of Natural Resources highlighted that the country’s offshore basin has captivated the attention of the global oil market participants. Labelled as “the gateway to the world’s fastest-growing super basin over the last four years,” Guyana’s offshore is estimated to have potential resources in excess of 25 billion barrels of oil equivalent (boe) and an estimated reserve in excess of 11 billion boe.

“The licensing round represents an opportunity for international and local companies to access Guyana’s offshore acreages for future development in this emerging energy market. The licensing round importantly allows the government of Guyana to create and administer an improved fiscal and regulatory framework that is driven on good international oil field practices and standards,” according to the country’s Ministry of Natural Resources.

Additionally, Guyana’s government is in the process of developing a new model of a production sharing agreement that will reflect the indicative terms and guidelines for the licensing round as well as introduce “comprehensive provisions” reflective of the developments in the oil and gas industry and international best practices observed in other jurisdictions, highlighted the ministry in its statement.

Back in July 2022, Rystad Energy, an energy intelligence group, disclosed that Guyana’s burgeoning offshore oil and gas industry was poised to enter the big league with revenues set to break the $1 billion mark in 2022 and see a significant annual acceleration in 2030.

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This boost in revenue was expected to be powered by the Stabroek block, according to Rystad Energy’s research, which showed that the government’s revenue from domestic production was on track to accelerate to $7.5 billion annually in 2030