Guyana holds off on new licensing pending seismic

The surveys will help with the negotiation of PSCs for remaining identified blocks and for unallocated acreage offshore, when Guyana resumes offshore licensing, Bynoe told delegates at an oil conference this week.

Guyana paused new licensing last year and will not resume until early 2021, when it completes a review of contract terms, Bynoe has previously said.

Guyana has concluded PSCs with several companies, including ExxonMobil that will deliver light sweet crude from the deepwater Stabroek block starting in December.

The PSCs with ExxonMobil and other companies including France's Total, UK-listed Tullow, Italy's Eni and Spain's Repsol are based on a model designed in 1986 before the significant potential of the country of 780,000 people was discovered in 2015.

Tullow recently announced that it is assessing heavy sour crude found on its Orinduik block off Guyana.

Guyana is making changes to its hydrocarbons legislation as the country approaches a critical 2 March 2020 parliamentary election in which the benefits of the coming oil boom are a major campaign theme.

The ruling People's National Congress (PNC) party that has overseen the advent of oil development faces a close challenge from the main opposition People's Progressive Party (PPP), which has pledged to toughen oil contract terms.

Both parties claim to be centrist and pro-business, but if it is elected, the PPP would "revisit the lopsided oil contracts, except that with ExxonMobil and its partners," the party's general secretary and former president Bharrat Jagdeo said 14 November.

Given Guyana's status as a frontier country with no proven reserves at the time the contract was signed in 1999, ExxonMobil could legitimately argue in favor of the terms in its PSC, Jagdeo said.

"Guyana could still claw back value from the contract with ExxonMobil," he said. But while ExxonMobil "can claim frontier advantages, we have made it clear we will review all the others in order to obtain more revenue for the country."

ExxonMobil recently announced a 14th discovery at Stabroek, boosting the total estimated recoverable reserves to more than 6bn bl of oil equivalent (boe).

The US major plans to start producing 120,000 b/d, ramping up to 750,000 b/d by 2025, a level rivaling that of neighboring Venezuela and outpacing Ecuador.

ExxonMobil's Stabroek partners are US independent Hess and Chinese state-owned CNOOC unit Nexen.

"We need to enhance the legislative framework for issuing licenses so we will not be going to market until that framework is more robust," Bynoe said on 6 November.

He said the contract terms must be revised "because there are elements of the basin that have now been de-risked."

The 2D and 3D seismic surveys will help Guyana to "understand the prospectivity that is there, so it will allow us to then issue blocks in a specific quadrant," Bynoe said.

By Canute James