Nov 3 (Reuters) – Guyana, one of the world’s hottest oil drilling areas, will offer 14 offshore exploration blocks on terms that will “significantly” boost its share of oil revenue, the vice president of the South American nation.
Officials this week approved an auction of oil concessions with timing details to be released by the Ministry of Natural Resources. The auction will include three deepwater and 11 shallowwater exploration blocks, Vice Chairman Bharrat Jagdeo said in a speech.
A new profit-sharing agreement that will cover future oil production deals is being worked on and will be finalized before the auction ends, he said. It will include a 50/50 oil profit split and a 10% royalty rate and 10% corporate tax rate, Jagdeo said.
The terms of the contract “significantly alter” the revenue distribution, with Guyana receiving a “greater share of the proceeds” than under the terms of the existing production-sharing agreement, Jagdeo said. But they should accelerate the small country’s oil boom by bringing in new producers.
A group led by Exxon Mobil (XOM.N) which includes Hess Corp (HES.N) and China’s CNOOC Ltd (0883.HK) has discovered 11 billion barrels of recoverable oil in a 6.6 million acre block (26,800 km2) off the coast of the country. This deal has been criticized for providing Guyana, a poor country of less than 800,000 people, with only around 15% of oil revenues, including a 2% royalty rate.
Oil producers can bid for as many blocks as they want, but no more than three blocks will be awarded to a single company. Each bid must include a development plan which will be reviewed with the financial bid, Jagdeo said.
Winning bidders must pay a signing bonus of $10 million for shallow-water blocks and double that for deep-water prizes, he said. They will also be required to post a guarantee of at least 20% of the work development plan.
Reporting by Neil Marks; Written by Gary McWilliams; Editing by Muralikumar Anantharaman
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