Companies seeking to explore offshore Guyana and produce potential oil finds will be able to bid for new oil blocks from the third quarter of 2022, Vice- President Dr. Bharrat Jagdeo said during a recent press conference. 

This will be possible because the government intends to replace the current system of direct negotiations with oil companies with an auctioning process. Through this system, new oil blocks will be sold to the highest bidder. 

And, the Vice- President noted that the sale of the new blocks will be accompanied by the sale of areas relinquished by the current operators as per their contracts with the Guyanese government. 

With these areas returned to the government, there would be additional areas to auction come 2022. 

With the intention to also offer relinquished areas for sale, Dr. Jagdeo said that the government is intent on “aggressively” enforcing those relinquishment provisions in the oil contracts. 

Already, Guyana has sold 7,056,262 barrels of oil, produced in the Stabroek Block offshore, earning the country 436 million USD. 

The country anticipates a greater windfall in the coming years. With more than 20 oil finds, oil giant ExxonMobil’s most recent estimate of the discovered recoverable resource for the Stabroek Block is approximately 10 billion oil-equivalent barrels.

Currently, the global company operates in three blocks offshore Guyana: the Stabroek, Canje and Kaieteur blocks. Production began in the Stabroek Block; this area is 6.6 million acres (26,800 square kilometers). 

And, in the Stabroek Block, ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 per cent interest. Hess Guyana Exploration Ltd. holds 30 per cent interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds 25 per cent interest.

Meanwhile, CGX alongside the Frontera Energy Corporation operates the Corentyne and Demerara Blocks, and also has a share in the Berbice Block.

The Vice- President, however, noted that the government is yet to make a decision on whether it will allow companies already exploring oil blocks to buy newer blocks, or whether those companies will be precluded. 

Importantly, too, Dr. Jagdeo also highlighted that the government has to consider whether it will seek seismic surveys before auctioning the blocks. These surveys will provide greater information on what resources are encompassed in specific blocks, but he said that consideration has to be given to who will pay for those surveys- the government of companies? 

As shorter term efforts are being made to strengthen management and oversight of the burgeoning oil and gas industry, companies should be able to bid for blocks from the Latin America and Caribbean region’s fastest growing country.