First Oil Block Auction Ends Well, Says Guyana’s VP

Guyana’s VP Bharrat Jagdeo declared the first oil block auction a “success,” as the government received offers for eight out of the 14 available blocks.

Jagdeo said they would review all bids by the end of the year.

According to him, the eight blocks attracted 14 bids from six companies. Jagdeo also mentioned that the world is moving towards net-zero emissions.

He noted this could affect the oil industry.

Guyana recently increased its royalty rates from 2% to 10%. A 10% corporate tax was also introduced.

Jagdeo believes these new rules make the blocks less appealing to foreign firms. Despite this, ExxonMobil and five other companies still bid.

The bidders included SISPRO INC, a local company, and an international consortium with firms from Qatar and Malaysia.

The auction began in December 2022. It was supposed to end in April 2023 but got extended.

The government said this was due to delays in finalizing new laws and agreements.

Big oil companies like Shell and Chevron had shown interest but didn’t bid in the end. Guyana sits on more than 11 billion barrels of oil, ranking it third in Latin America.

Background

The history of oil exploration in Guyana goes back several years. However, major discoveries didn’t happen until recently.

These findings have shifted the country’s economic prospects. Before this, Guyana mainly relied on agriculture and mining.

Its economy now has a new significant pillar: the oil sector.

ExxonMobil made the first big discovery in 2015. The find was in the offshore Stabroek Block.

Since then, interest in Guyana’s oil potential has surged. This new focus has led to multiple rounds of talks and negotiations.

The government has been keen on balancing benefits and environmental concerns.

In terms of governance, Guyana has taken steps to manage its newfound wealth. They established the Natural Resources Fund in 2019.