Pressure mounts for Guyana to ready new oil contract model -vice president

CGX Energy

04/02/2022 01:09

Feb 3 (Reuters) - Oil discoveries in Guyana are increasing
the pressure on the government to have ready a new
profit-sharing agreement for companies moving projects from the
exploration to the production phase, Vice President Bharrat
Jagdeo said on Thursday.
    Canada-based producer CGX Energy  OYL.V  and its parent
company Frontera Energy  FEC.TO  earlier this week announced an
oil and gas discovery at the Kawa-1 well off Guyana and said
they will drill a second well later this year.
    The finding comes after oil giant Exxon Mobil  XOM.N ,
U.S.-based Hess Corp  HES.N  and China's CNOOC  0883.HK 
confirmed over 10 billion barrels of recoverable oil and gas
resources in the South American country's massive Stabroek
block.
    The profit sharing agreement (PSA) signed by Guyana's
previous government with the Exxon-led consortium has been
called weak by some analysts and experts. It gives the nation
less than 20% of oil profits. 
    The government of President Irfaan Ali has promised to this
year green-light a new contract model for future oil
developments.
    "CGX has found oil. There may be now increased pressure a
bit to move swiftly to a new model PSA," Jagdeo said in a press
conference. "That would correct many of the things we found
wrong with the one that was signed with Exxon." 
    Jagdeo has said the new PSA will give Guyana a fair share of
the proceeds and see increased royalty and taxes https://www.reuters.com/business/energy/guyana-official-vows-develop-its-oil-an-environmentally-safe-manner-2021-08-17,
 compared with the previously signed agreements for the Stabroek
block. 
    Guyana is also weighing creating a national oil company that
could develop areas returned by private firms that have failed
to confirm reserves, the Vice President said.
    The government said an auction to offer those returned
areas, along with blocks so far unawarded, will be launched in
the third quarter, and the new PSA model should be ready by
then.
    Guyana could also finance seismic work in unexplored areas
to increase their profile before the auction, the official said.

 (Reporting by Neil Marks, writing by Marianna Parraga, editing
by Lincoln Feast.)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))