Page 5 - LatAmOil Week 06 2022

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)

Week 06 10•February•2022 www. NEWSBASE .com P5