Introducing the new Model Petroleum Agreements
On March 6, 2023, the Ministry of Natural Resources of Guyana, on behalf of the government, announced the release of the draft Model Petroleum Agreements for both deepwater and shallow-water areas, and the commencement of a fourteen-day consultation period before finalization.
As stated by the Ministry, the draft Model Petroleum Agreements embody rigorous research and analysis by the Ministry’s internal team, and external consultants on all topics relevant to a modern petroleum agreement for Guyana. The process involved a comprehensive assessment of the current petroleum agreement and the identification of best practices relevant to every contractual aspect of a modern agreement grounded in the Guyana context.
According to the government, in order to ensure new investments are governed by a comprehensive framework of international best practices, the Model Petroleum Agreements will be followed by an overhaul of the 1986 Petroleum Act and Regulations.
Draft Model Deepwater Petroleum Agreement
To download the draft, visit:
https://petroleum.gov.gy/documents/draft-model-deepwater-petroleum-agreement
Draft Model Shallow Water Petroleum Agreement
To download the draft, visit:
https://petroleum.gov.gy/documents/draft-model-shallow-water-petroleum-agreement
The Guyana 2022 licensing round
The Guyana 2022 Licensing Round Schedule will be updated accordingly, which will reflect the new timeline for the publication of the finalized Terms and Guidelines, Model Petroleum Agreements, and process of bidding; all will be adjusted to facilitate maximum participation from global interest.
It is important to note that official Expressions of Interests (EoI) have been received for all 14 blocks for tender of the Guyana 2022 Licensing Round, demonstrating global interest in Guyana’s shallow and deepwater offshore acreage.
The Model Petroleum Agreements represent the PPP/C government’s commitment to its manifesto promise of establishing a model production sharing agreement (PSA), guided by industry standards and best practices. At the core, these are aimed at maximizing the socio-economic benefits of Guyana without disincentivizing foreign investors in the sector. Through these mechanisms, the government of Guyana remains committed to a new era of oil and gas development, characterized by a competitive and favorable investment climate.
Blocks for tender
Deepwater blocks
- Block D1 (2,880 square kilometres);
- Block D2 (3,054 square kilometres);
- Block D3 (2,921 square kilometres).
Qualification criteria for deepwater blocks
Shallow-water blocks
- Block S1 (1,531 square kilometres);
- Block S2 (1,106 square kilometres);
- Block S3 (1,701 square kilometres);
- Block S4 (1,788 square kilometres);
- Block S5 (1,784 square kilometres);
- Block S6 (1,704 square kilometres);
- Block S7 (1,192 square kilometres);
- Block S8 (1,707 square kilometres);
- Block S9 (1,959 square kilometres);
- Block S10 (1,619 square kilometres);
- Block S11 (1,532 square kilometres).
Qualification criteria for shallow-water blocks
Contract duration
The duration of the contract period for the shallow water and deepwater blocks for tender consists of:
Maximum five-year exploration license and a 20-year production license for shallow water blocks for tender. Renewal of the production license at the end of the 20-year production period is subject to negotiation with application made no later than 12-months prior to the scheduled expiry of the production license.
Maximum 10-year exploration license and a 20-year production license that may be extended by an additional 10-year period for deepwater blocks for tender.
Note: The grant of renewals to the exploration period beyond the initial period is conditional upon the contractor having completed the proposed work program in the preceding period, and payment of the bank guarantee associated with the work program for the subsequent period.
Mandatory relinquishment requirements
Note: The first relinquishment relates to the original area. The subsequent relinquishments are expressed as a percentage of the remaining area, i.e. a 50% relinquishment upon second renewal would be 25% of the original area.
Summary of fiscal terms
Minimum work
Expenditure commitment
They apply only in case the contractor does not carry out their work program, i.e. they are a form of performance guarantee that gets reduced as the contractor performs against the guarantee. A performance guarantee for 20% of the value of the expenditure commitment is payable upon execution of the contract and upon entry into the respective renewal exploration periods.
Participation rules
Operatorship and participation in consortium
For more information, visit: https://petroleum.gov.gy/guyana-offshore-licensing-round-2022
About the Author: Felipe Gaitán Michelsen
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