# Shell, Chevron and Petrobras weigh Guyana oil auction bids -sources
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-03-07
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Guyana Offshore Oil Exploration Auction Attracts Major
Meta Description: Join Guyana's upcoming offshore oil auction with industry giants like Shell and Chevron. Learn more about this hot oil region and the bidding process.
URL: https://financedigest.com/shell-chevron-and-petrobras-weigh-guyana-oil-auction-bids-sourceshtml

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By Sabrina Valle and Marianna Parraga

HOUSTON (Reuters) – Guyana’s coming auction of offshore oil exploration blocks has lured at least 10 companies including Shell, Petrobras and Chevron, to consider the decade’s hottest oil region, people close to the matter said.

The South American country is offering 14 offshore blocks in an attempt to speed economic development and reduce an Exxon Mobil-led consortium’s dominance of its oil sector. Winning bidders are expected to be picked [next month](https://www.financedigest.com/ferry-industry-celebrates-fifth-successive-year-of-growth-for-car-travel-by-sea-and-four-new-ships-launching-in-next-twelve-months.html "Ferry industry celebrates fifth successive year of growth for car travel by sea And four new ships launching in next twelve months").

Guyana Vice President Bharrat Jagdeo on Monday spoke at the CERAWeek [energy conference in Houston to drum up support](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record") for the country’s first competitive bidding round.

“We see this as big, transformative for our people. We are in a mad rush to get this done before net-zero comes,” he told Reuters, referring to the target to slash [fossil fuel](https://www.financedigest.com/eu-approves-effective-ban-on-new-fossil-fuel-cars-from-2035.html "EU approves effective ban on new fossil fuel cars from 2035") use by 2050.

He [plans to meet](https://www.financedigest.com/uks-sunak-plans-to-meet-biden-in-g20-summit.html "UK’s Sunak plans to meet Biden in G20 summit") with U.S. government officials, international and state-run [oil firms](https://www.financedigest.com/uk-oil-gas-firms-to-leave-years-worth-of-output-in-ground-with-tax-hikes-report.html "UK oil, gas firms to leave year’s worth of output in ground with tax hikes-report") while in Houston.

Companies interested in the April round have paid for seismic [data to evaluate the blocks and decide whether to submit offers](https://www.financedigest.com/aon-data-empowers-unica-to-offer-flood-insurance-for-5-2bn-canadian-peril.html "Aon data empowers Unica to offer flood insurance for .2bn Canadian peril"), according to the government. They include six big international producers, [Energy Minister](https://www.financedigest.com/exclusive-norway-eyes-high-gas-output-until-2030-says-energy-minister.html "Exclusive-Norway eyes high gas output until 2030, says energy minister") Vickram Bharrat has said, without identifying the companies.

None of the companies have decided on bids as they wait for the government to [release contract](https://www.financedigest.com/previous-chief-scientist-of-rsa-releases-smart-contract-connectivity-whitepaper-facebook-director-of-engineering-llvm-creator-joins-chainlink-advisory-board.html "Previous Chief Scientist of RSA Releases Smart Contract Connectivity Whitepaper, Facebook Director of Engineering & LLVM Creator Joins ChainLink Advisory Board") terms, the people familiar with the matter said.

Guyana is [considering a state investment firm that would hold stakes with partners in offshore blocks offered through government-to-government talks](https://www.financedigest.com/finnish-centre-right-eyes-coalition-talks-as-defeated-marin-considers-future.html "Finnish centre-right eyes coalition talks as defeated Marin considers future"), Jagdeo said. The [investment firm](https://www.financedigest.com/toshiba-in-talks-with-four-investment-firms-for-strategic-ideas-sources.html "Toshiba in talks with four investment firms for strategic ideas -sources") would not be an operator, he added.

Guyana [estimates it has up to 25 billion](https://www.financedigest.com/electric-kick-scooter-market-is-projected-to-reach-6-5-billion-by-2031-and-estimated-to-grow-at-11-5-cagr-between-2021-and-2031.html "Electric Kick Scooter Market is Projected to Reach .5 billion by 2031, And estimated to grow at 11.5% CAGR between 2021 and 2031") barrels of oil and gas in place off its coast. A [consortium that includes](https://www.financedigest.com/uniper-sells-uae-marine-fuels-refinery-to-consortium-including-montfort.html "Uniper sells UAE marine fuels refinery to consortium including Montfort") Exxon Mobil, Hess and CNOOC operates the country’s most important area, the 6.6-million-acre (26,800 sq km) Stabroek block, with more than 30 discoveries to date.

Exxon, QatarEnergy, Shell PLC, [Chevron Corp and Petrobras are among the oil](https://www.financedigest.com/chevron-considering-rail-transport-for-kazakhstan-oil-ceo-says.html "Chevron considering rail transport for Kazakhstan oil, CEO says") giants that have paid $20,000 for the geologic information available on the 11 shallow water and three deep-water blocks, the people familiar with the matter said.

Chevron’s main interest is to [gain access to Guyana’s geological data](https://www.financedigest.com/stocks-u-s-dollar-gain-despite-surprise-weak-china-data.html "Stocks, U.S. dollar gain despite surprise weak China data"), three of the people said, noting the company has blocks in neighboring Suriname and Venezuela.

Exxon and QatarEnergy have said they are waiting for the full [contract terms to consider](https://www.financedigest.com/4-questions-to-consider-before-embarking-on-a-contract-packaging-expansion.html "4 questions to consider before embarking on a contract packaging expansion") a bid. Shell said it is evaluating the offshore lease sale to determine a possible participation. Chevron and Petrobras did not respond to requests for comment.

Guyana also has begun direct negotiations on the 14 [blocks and other areas with governments that have state-controlled oil companies](https://www.financedigest.com/exxon-sues-eu-in-move-to-block-new-windfall-tax-on-oil-companies.html "Exxon sues EU in move to block new windfall tax on oil companies"). Guyana also may reclaim up to 20% of Exxon’s biggest block and reoffer it in the future.

The Guyanese government [expects firms](https://www.financedigest.com/ecb-firms-up-expectations-for-july-interest-rate-hike.html "ECB firms up expectations for July interest rate hike") like QatarEnergy to both bid on the April auction and engage in direct negotiations, Jagdeo told Reuters last month.

Graphic: Blocks on offer for Guyana’s 2023 licensing round https://fingfx.thomsonreuters.com/gfx/ce/mopakqbqdpa/8Vbx7-blocks-on-offer-for-guyana-s-2023-licensing-round.png

SCHEDULE DELAYS

Guyana plans to [issue a new Production Sharing](https://www.financedigest.com/ford-posts-lower-profit-issues-downbeat-outlook-shares-drop.html "Ford posts lower profit, issues downbeat outlook; shares drop") Agreement (PSA) model for leasing offshore blocks by the end of this month, several weeks late. A draft proposal that would go through a two-week public consultation earlier missed its Feb. 13 release.

The auction will receive bids through April 14. According to the bidding round plan, the winners would be disclosed between late May and early June after an evaluation, Jagdeo said.

The proposed rules will nearly double the government’s take from oil production to 27.5% of royalties and [profit](https://www.financedigest.com/bp-makes-record-profit-in-2022-slows-shift-from-oil.html "BP makes record profit in 2022, slows shift from oil") oil, plus a new 10% corporate tax, compared to Exxon’s main contract.

The new agreement also will require producers provide more information to Guyana, the [vice president](https://www.financedigest.com/soldo-welcomes-darren-upson-as-vice-president-of-small-business-europe.html "Soldo Welcomes Darren Upson As Vice President Of Small Business Europe") said.

“We believe it is asymmetric now, and a bit in favor of the companies,” Jagdeo said. We want more information to come from the [oil and gas](https://www.financedigest.com/oil-gas-downhole-cables-market-to-witness-widespread-expansion-during-2019-2027.html "Oil & Gas Downhole Cables Market to Witness Widespread Expansion During 2019-2027") companies.

The new agreement will request details of the [production costs that companies deduct before splitting oil](https://www.financedigest.com/best-paying-jobs-in-oil-and-gas-production.html "Best Paying Jobs in Oil And Gas Production") revenue with the country, he said. The Exxon group can now use 75% of the oil production to offset a variety of costs, [including construction](https://www.financedigest.com/3-ways-to-safeguard-and-include-women-in-construction.html "3 ways to safeguard and include women in construction") of its new Guyana headquarters.

The oil model also will set stricter terms for tendering and procurement, [covering everything from production vessels](https://www.financedigest.com/japan-insurers-to-maintain-cover-for-lng-vessels-in-russian-waters.html "Japan insurers to maintain cover for LNG vessels in Russian waters") to drilling suppliers. However, the terms will not affect Exxon’s Stabroek block.

“We are not renegotiating Stabroek,” Jagdeo said. “We don’t want to lose momentum.”

Graphic: Exxon ramps up [oil production](https://www.financedigest.com/oil-rises-on-saudi-oil-production-expectations.html "Oil rises on Saudi oil production expectations") in Guyana https://www.reuters.com/graphics/GUYANA-OIL/zdpxobxmevx/chart.png

(Reporting by Sabrina Valle and Marianna Parraga; additional reporting by Marta Nogueira in Rio de Janeiro; Editing by David Gregorio and Tomasz Janowski)


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