Page 5 - LatAmOil Week 06 2022
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LatAmOil                                     COMMENTARY                                            LatAmOil


                         “We are cognisant, however, that there must be   for [the] Stabroek block,” he said.
                         a balance between the pursuit of our oil inher-  Jagdeo indicated that the creation of a new
                         itance and the protection of our environment,”   model for PSA would see officials in George-
                         he said. “Budget 2022 keeps us on that trajectory.   town taking a comprehensive look at all aspects
                         So too does the new Low Carbon Development   of oil development agreements. However, he
                         Strategy 2030.”                      declined to reveal the specifics of the plan, say-
                           Even with these measures in place, however,   ing: “I don’t want to get into too many details
                         the government is sure to face criticism from   about issues raised such as high royalty rate and
                         those who believe that it has shown far too   ring-fencing. Those have to be looked at along
                         much favour to (and reserved too much money   with tax treatment and a whole range of other
                         for) the international oil companies (IOCs) that   issues ... There are about 10 or 11 areas we identi-  Jagdeo fears
                         are seeking to explore and develop the offshore   fied to look at, and they have to do with the fiscal
                         zone.                                terms.”                              that Guyana may
                                                                                                   miss its chance
                         New PSA model                        Act fast
                         Complaints of this type have circulated for years,   The vice-president also stressed that the govern-  to develop its oil
                         both among Guyanese politicians and among   ment hoped to move quickly on this front.
                         non-Guyanese industry observers. They came   If officials in Georgetown do not treat the  and gas before
                         up again just last week, when David Patterson, a   matter with sufficient urgency, he said, the coun-
                         member of the Guyanese Parliament who serves   try may miss its chance to develop its reserves  the transition to
                         as the opposition Alliance for Change (AFC)   of oil and gas before the transition to renewable   renewable energy
                         party’s shadow petroleum minister, called for   energy sources. If that happens, he said, Guyana
                         renegotiation of the Stabroek deal during a   will end up poorer because it will not be able to
                         debate over the Budget 2022 bill.    monetise its resources.
                           Patterson’s proposal did not gain any trac-  “Let me be nuanced, too, because I like to be
                         tion during the budget discussions. However,   clear for people to understand,” he commented.
                         the Ali administration has given clear signs that   “We have a window within which we want to
                         it recognises the potential for discord over the   accelerate production to transform what is a
                         terms of oil development deals. Vice-President   buried asset – and might become stranded – into
                         Bharrat Jagdeo addressed the matter directly last   a financial asset, and so we therefore have to take
                         week, saying at a press conference that if CGX   that into account. But the conditions [of the new
                         and Frontera reached the point of seeking a pro-  PSAs] will be better.”
                         duction-sharing agreement (PSA) in order to   The outcome of this effort to draw up a more
                         develop their discovery at Kawa-1, Georgetown   favourable PSA for Kawa-1 specifically – and for
                         would seek more favourable terms.    other licence areas more generally – has not yet
                           Guyanese authorities are in a stronger posi-  been decided. The government’s legislative and
                         tion now than they were in 2015, when Exxon-  executive branches are still working to deter-
                         Mobil made its first discoveries at Stabroek, he   mine what future agreements should look like,
                         explained. As a result, the process of drawing up   and they are not ready to compromise. They do
                         a PSA for Kawa-1 should help establish a model   have time to discuss the matter, though, since
                         for drafting future PSAs, he added.  Frontera and CGX will have to carry out fur-
                           “[There] will be better terms when the time   ther exploration drilling before they decide how
                         comes for the CGX PSA. The PSA will see better   (or even whether) to proceed with commercial
                         terms for Guyana as opposed to the one signed   development of Corentyne. ™





























                                                    The partners spudded Kawa-1 last August (Image: CGX Energy/Frontera Energy)



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