Exclusive-Guyana in ‘no rush’ to draft new oil production-sharing pact -minister

　　div classBodysc17zpet90 cdBBJodivpBy Marianna Parragap

　　pHOUSTON Reuters – Guyana is in “no rush” to draft a new production sharing agreement PSA for offshore oil development, its Natural Resources minister told Reuters, reversing a yearlong drive to devise new rules for future output. pdivdivdiv classBodysc17zpet90 cdBBJodiv

　　pThe government of South Americas newest crude oil producer said in 2021 it was planning a new agreement to revamp terms and boost royalties for future oil and gas projects. The proposed document was expected to improve terms for Guyana of a 2016 contract with Exxon Mobil and its partners for the prolific Stabroek block.p

　　pBut the tiny nation, which has become one of the most desired exploration hot spots with the discovery of about 11 billion barrels of oil and gas, has struggled to quickly advance legal and regulatory frameworks for its energy industry. The original PSA reached with Exxon has been criticized even by the current government for being too favorable to oil producers.p

　　pGuyana aims to prioritize creation of an oil and gas regulatory body, Minister Vickram Bharrat said this week on the sidelines of the Offshore Technology Conference in Houston.p

　　p“We have started some of the work on designing a model PSA according to internationally accepted standards,” he said. “However, there is no rush to conclude it immediately because we dont see any other companies applying for a PSA just yet.”p

　　pCompanies currently exploring in Guyana have in recent years signed or extended licenses to complete drilling. The new PSA would be needed to move projects to the development phase. p

　　pOFFSHORE DISCOVERYp

　　pIn January, a joint venture by Canadabased CGX Energy and Frontera Energy made one of the countrys most recent offshore discoveries. The venture will focus drilling this year on the Corentyne block, the most promising of its three blocks, including Demerara and Berbice. p

　　pFrontera told Reuters in March the venture was in talks with the Guyanese government about what do with Demerara, while preparing drilling at the Wei1 exploration well in Corentyne in the second half of 2022, but declined to provide more details. p

　　p“This is only the second well for CGX, so I would say, in my own estimation, that in about three years from now, once everything goes well in terms of exploration, we might be ready to deal with CGX to sign a PSA,” the minister said.p

　　pBetween 2019 and 2020, a group led by Tullow Oil and Repsol also announced discoveries at the Orinduik and Kanuku blocks off Guyanas coast.p

　　pBut shortly after Tullow said it would limit capital exposure in Guyana, possibly selling a portion of its stake to another company. So far that has not happened. p

　　pSEEKING ‘THE IDEAL PARTNER’ p

　　pAccording to Bharrat, the process for drafting a new PSA model will be similar to the mechanism for approving Guyanas local content policy. A highlevel panel will be nominated for the task and domestic and foreign consultants will be involved.p

　　pIn the meantime, the government plans to have ready this year an energy regulatory agency and probably a state oil company that could offer partnerships in exploration areas returned by other firms or for new blocks yet to be put on the table.p

　　pIn Guyanas todo list there is also a competitive tender to select the company that will market its share of oil, once a contract with a unit of Saudi Aramco expires in September.p

　　p“We are looking for longterm arrangements, for the ideal partner for marketing and getting better benefits,” Bharrat said, adding the nation aims to save as much as possible on trading fees.p

　　pIndian state refiners that have shown interest in a governmenttogovernment agreement to buy Guyanese oil after testing the Liza sweet light crude last year, would also have to participate in the tender, the minister said.p

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　　pp Reporting by Marianna Parraga and Sabrina Valle Editing by David Gregoriop

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