Guyana will seek better terms in future oil production sharing agreements than those in its 2016 contract with US major ExxonMobil and the 2013 agreement with Canadian independent CGX Energy.
The government will respect the "sanctity" of the 2016 contract signed by the previous administration with the consortium led by ExxonMobil, although it is "one of the worst ever between a government and an oil company," natural resources minister Vickram Bharrat said last week.
But the terms of the agreement with CGX Energy that expires in February 2023 will be changed, vice president Bharrat Jagdeo said. The company announced a commercial oil find earlier this month in the shallow water Corentyne block — the first discovery outside the prolific Stabroek block from which ExxonMobil and partners US independent Hess and Chinese state-owned CNOOC unit Nexen started production in December 2019.
CGX has not yet commented on the government's statement.
The contracts with ExxonMobil and CGX include a 2pc royalty on gross earnings, leading the government to receive 14.5pc of initial oil revenues. The government will begin to receive higher revenues after the companies recuperate initial costs.
The agreement has been described as "weak" by local and foreign industry analysts. The country's production sharing model is "relatively favourable to investors by international standards," the IMF said in an April 2018 review.
New terms will be applied to successful bidders in auctions of offshore oil blocks in the third quarter of this year, which will include acreage relinquished by the ExxonMobil led consortium.
"We have to decide, however, whether we should do seismic surveys before auctioning as this would increase the value of the blocks, or just auction the blocks as they are," Jagdeo said. "An alternative would be to vest all of these blocks into a national oil company."
ExxonMobil started production of 32.1°API Liza crude from the deepwater Stabroek block in December 2019. Current output is about 120,000 b/d. Major projects underway will lift output to over 800,000 b/d by 2026.
