Georgetown: Vice President (VP), Dr. Bharrat Jagdeo said Monday that the government will be auctioning off relinquished oil blocks to international oil companies by the third quarter of 2022.
The relinquishing of oil blocks means the surrendering of all or parts of the concession to the lessor, or in this case, the Government of Guyana.
Dr. Jagdeo was at the time addressing the media during a news conference at the Arthur Chung Convention Centre (ACCC).
He said to successfully auction the oil blocks, the government will have to “aggressively enforce” the relinquishment provisions in all of the oil contracts.
“We have been caught up with trying to put in place the architecture for the management of the industry, but we need to now go to the next stage, which is enforcement, then auctioning,” he asserted.
Several policy decisions will also have to be made, the VP said, as he pointed to the importance of hiring an expert versed in the intricacies of oil block auctioning.
Further, he stated that the government will have to identify the mode of auctioning and whether it would include conducting 3D seismic surveys of the oil blocks to inform the sale of the concession. This data will give the government the power to demand higher bidding prices. Notably, this method of auctioning is practiced by Guyana’s eastern neighbour, Suriname.
“That policy decision has to be made, and if we decide to do the seismic, who is going to fund it? The government has to. To avoid this method altogether, we can just auction the areas as is, where is,” he stated.
He said further, that considerations regarding whether existing block holders should be prohibited from buying into the auctions are also on the table for discussions.
“If there are laws to be amended to make this happen then definitely. We would have to look at the framework for looking at the auction too.”
According to the 2016 Stabroek Block Production Sharing Agreement (PSA) under Article Four, which deals with Exploration Programme and Expenditure Obligation, the contractor shall carry out minimum work commitments, during the periods into which Prospecting Operations are divided. The agreement notes that the initial period of four years shall be divided into two phases, each, having a duration of 24 months.
In the initial stage, the contractor shall acquire all available 2D seismic data from previous surveys conducted over the contract area, process and/or reprocess as necessary, and interpret same. At the end of phase one of the initial period, the contractor shall either elect to relinquish the entire contract area, except for any discovery area in respect of which the minister is informed under Section 30 of the Petroleum Act and the area contained in any Petroleum Production Licence; or subject to Article Five, relinquish twenty five percent of the Contract Area and commit to the Work Programme in phase two.
During phase two of the initial period, the contractor shall conduct a survey to acquire a minimum, 1000 line kilometers of new marine 2D seismic and/or 500 square kilometers of new 3D seismic over the Contract Area, process, and interpret same.
At the end of the initial period of four years, the contractor shall elect either to relinquish the entire contract area or, subject to Article Five, relinquish 20 per cent of the contract area, except for any discovery area in respect of which the minister is informed under Section 30 of the Act and the area contained in any Petroleum Production Licence, and renew the Petroleum Prospecting Licence for a further period of three years.
In simpler terms, ExxonMobil should have already relinquished 45 per cent of the prolific Stabroek Block to the state.
Vice President Bharat emphasised his committed to ensuring that the government strengthens the execution of block relinquishment.
