The vice president of Guyana, Bharrat Jagdeo, has said that the country will seek to increase its share of the revenue from future oil production in its waters by introducing new rules for the next licensing round.
Together with partners CNOOC and Hess, ExxonMobil, the maker of Mobil hydraulic oil and other industrial fluids, has made a string of discoveries offshore of Guyana and already started producing 360,000 barrels per day (bpd) of crude oil. With there being billions of barrels in estimated crude oil reserves, this is likely to increase substantially and make Guyana a major oil producer.
Nevertheless, the current deal is thought to be unfavourable for the country, with it receiving 15% of oil revenues in addition to a 2% royalty rate. According to an address by Jagdeo, as cited by Reuters, the new rules mean that profits would be divided evenly with 10% rates for corporation tax and royalties. The scope of potential bidders for the new fields has also been widened, according to Jagdeo:
“We decided that to get the bids more competitive, we will allow locals and international companies to bid so there will be minimum technical and financial qualifications for the bids.”
The next auction will include 14 blocks, with 11 of these being shallow and the remaining three being deep. Companies can bid for any number of blocks, but each company will not be able to win more than three blocks. Winner bidders will pay signing bonuses of $10 million for shallow-water blocks and $20 million for deep-water blocks.