Guyana Delays Closely-watched Oil Blocks Auction to July

(Reuters) Guyana’s closely watched auction of 14 offshore oil blocks faces a delay with the South American country pushing back the deadline for oil explorers to submit bids to mid-July.

The three-month delay is in response to industry feedback and the need for modernizing the country’s oil and gas regulatory framework, which is expected to guide development of the blocks, Guyana’s Ministry of Natural Resources said in a statement.

Guyana originally had hoped to receive bids through mid-April and award contracts under new financial terms by the end of next month for up to three deepwater and 11 shallow-water blocks.

The government in March began public consultations for a new production sharing agreement (PSA) model that will increase royalties and it also plans to introduce an additional 10% corporate tax on oil companies.

The new terms are designed to significantly increase the government’s take from its booming oil output, now controlled by a consortium led by Exxon Mobil.

The auction, launched in December, “continues to receive strong global interest and the government has benefited from insightful feedback” on the proposed PSA, the ministry said. Officials have said they have received interest from international and national oil companies.

The bidding round is Guyana’s first competitive auction following the allocation of blocks through direct negotiations. Another auction could follow next year, Vice President Bharrat Jagdeo said last month.

The Exxon-led consortium, which also includes Hess Corp and China’s CNOOC Ltd, has discovered about 11 billion barrels of recoverable oil and gas and is producing some 380,000 barrels per day (bpd) of crude.

This month, the group took delivery of a third offshore production vessel in Guyanese waters that could begin pumping oil later this year. Output is expected to reach some 600,000 bpd in 2024.

Guyana recently concluded agreements with oil and gas exploration firms PGS Exploration UK Ltd and CGG Data Services to reprocess seismic data relevant to the blocks on offer, which will be available for companies participating in the round.

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