‘No rushing the process’ – Jagdeo says gov’t to finalise new Petroleum law, model contracts by July

The government promised Guyana’s regulatory framework for the nascent oil and gas sector will be up to par and on Thursday, Vice President Dr. Bharrat Jagdeo said an overhaul of the 1986 Petroleum Act and updated model oil contracts should be finalised by July.

By that time, the government hopes it will auction off 14 unused oil blocks offshore Guyana.

“The outer time limit for legislation and the PSA [Production Sharing Agreements (PSAs), commonly called oil contracts] is mid-July.

“We are not going to rush the process but that is the outer timeline,” the Vice President said at a press conference hosted at the Arthur Chung Conference Centre at Liliendaal, Georgetown, on Thursday.

Last year, government officials said it would overhaul the Petroleum Act so that it can be more applicable to the modern oil and gas environment. More recently, Jagdeo said issues with that outdated law have been identified and a new draft will be in the public domain for consultations soon.

On Wednesday, the government extended the auction of oil for 11 shallow blocks and three deep water blocks. Jagdeo added that this extension will see the blocks being awarded about a month and a half after the auction.

Before that, the government released new model oil contracts and opened a 14-day consultation period for persons to submit their comments on those documents that are expected to be used when the new blocks are awarded.

These efforts are underway because the government wants Guyana to benefit more from its petroleum sector, Jagdeo said.

“We want to ensure that we get more benefits from Guyana from the fiscal side, (we want) more business flowing from Guyanese companies and individuals that’s through the Local Content Law and (we want) a PSA that can properly regulate the sector from a safety perspective and an environmental perspective,” the Vice President told reporters.

NO CHANGES TO BIDDING CONDITIONS

He, however, noted that changes to the criteria for companies seeking to bid for Guyana’s oil blocks are not likely.

The News Room understands that some foreign companies interested in participating in Guyana’s auction have engaged the government on its technical criteria provided for bidding for the deep water blocks.

Specific concerns have been raised about the criterion of producing at least 200,000 barrels of oil per day in deep water projects elsewhere.

Asked about any concerns raised, Jagdeo said the government is not likely to change any conditions before the auction.

This is so because the government has already made some provisions to allow more investors, including local investors, to participate in the auction, once they can foot the financial conditions.

Jagdeo pointed out that in the qualification criteria for shallow water blocks, non-operators do not need experience in exploration and production.

According to an information document provided by the Ministry of Natural Resources, non-operators need not demonstrate technical competence but must satisfy key financial criteria.

The financial conditions ask for audited financial statements of the last five years, must have a debt to equity percentage less than or equal to 50 per cent, must have a current ratio greater than or equal to one, must have an interest cover greater than or equal to two and finally, non-operators must show investments in offshore blocks over the last five years of at least US$10 million.

The only condition the government may be open to changing is its limit on the award of three blocks per investor. That could be changed, post-bidding, if there is only one investor bidding in a larger number of blocks, Jagdeo said.