Guyana demands higher royalties and revised terms for new oil contracts

HOUSTON, Aug. 17 (Reuters) – Guyana aims to increase its oil royalties and revamp other contractual terms under a new profit-sharing agreement (PSA) for future crude and gas projects currently in the pipeline. the draft state, said the vice president of the South American nation said Tuesday.

The small country has emerged as one of the most sought-after oil exploration hotspots after a group led by Exxon Mobil (XOM.N), including US-based Hess Corp (HES.N) and Chinese CNOOC Ltd (0883.HK), discovered about 9 billion barrels of recoverable oil and gas off its coast.

Guyana plans to install an energy regulator this year and will unveil the winner of a one-year contract in the oil production market of the prolific Stabroek bloc this month.

The new PSA will be tougher than the one negotiated with the Exxon consortium and could be ready “in about six months,” Vice President Bharrat Jagdeo said on the sidelines of the Offshore Technology Conference in Houston.

The government disagrees with Exxon over flaring its Liza project, the first to produce crude in Guyana after discoveries.

“We have made it clear that in any new PSA that we negotiate for these blocks, the terms will be very, very different from the Stabroek block,” Jagdeo said, including higher royalties and cost deduction mechanisms. investment.

Previous Guyanese governments have been criticized for lucrative terms given to companies involved in the Stabroek bloc.

“All the shortcomings of this contract will be corrected,” he said.

The International Energy Agency, a group of oil-consuming countries, said this spring that if governments wanted to achieve net zero carbon emissions by 2050, there would be no need for further fossil fuel developments. . A United Nations panel also said last month that burning fossil fuels causes global warming.

“We have been called upon to leave our oil in the ground,” he said. “We will grow our oil industry by putting in place regulations for safe and low carbon operations.”

Reporting by Marianna Parraga and Sabrina Valle; Editing by Sonya Hepinstall, Dan Grebler and Cynthia Osterman

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