Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

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

Commodities May 06, 2022 01:01PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Guyana's Natural Resources Minister Vickram Bharrat speaks during a panel at the Offshore Technology Conference (OTC) in Houston, Texas, U.S. May 3, 2022. REUTERS/Sabrina Valle

By Marianna Parraga

HOUSTON (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 year-long drive to devise new rules for future output.

The government of South America's 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 (NYSE:XOM) and its partners for the prolific Stabroek block.

But 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.

Guyana 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.

"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 don't see any other companies applying for a PSA just yet."

Companies 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.


In January, a joint venture by Canada-based CGX Energy and Frontera Energy (OTC:FECCF) made one of the country's 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.

Frontera told Reuters in March the venture was in talks with the Guyanese government about what do with Demerara, while preparing drilling at the Wei-1 exploration well in Corentyne in the second half of 2022, but declined to provide more details.

"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.

Between 2019 and 2020, a group led by Tullow Oil (LON:TLW) and Repsol (OTC:REPYY) also announced discoveries at the Orinduik and Kanuku blocks off Guyana's coast.

But 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.


According to Bharrat, the process for drafting a new PSA model will be similar to the mechanism for approving Guyana's local content policy. A high-level panel will be nominated for the task and domestic and foreign consultants will be involved.

In 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.

In Guyana's to-do 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 (TADAWUL:2222) expires in September.

"We are looking for long-term 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.

Indian state refiners that have shown interest in a government-to-government 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.

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

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email