Guyana Govt favours direct engagement, selective bidding to allocate remaining oil blocks

Despite the parliamentary Opposition urging Government to auction Guyana’s remaining oil blocks, Government has intimated that a process of both direct engagement and selective bidding would be used to allocate the blocks.
When contacted, Natural Resources Minister Raphael Trotman directed Guyana Times International to a statement carried in sections of the media. In the statement, he expressed that direct engagements with other State-owned companies such as Brazil’s Petrobras would be sought.
“As for the manner of disposal, we will be seeking direct engagements with some State-owned companies such as Petrobras and may favour a select bidding process in order to attract other international majors,” Trotman stated.

At his press conference last week, Opposition Leader Bharrat Jagdeo had urged the Government to take its own petroleum advisor’s advice, which was to auction off the remaining oil blocks.
“You don’t need to bring anyone in to tell you what your advisor already said, ‘Auction the blocks’. That is the best way that the Government gets value,” Jagdeo had stressed to the media.
The issue of the oil blocks is a thorny one. Last year, Public Infrastructure Minister David Patterson caught flak when he claimed that all of the offshore petroleum blocks had been farmed out by Jagdeo, a former President.
Petroleum advisor, Dr Jan Mangal, had come out publicly to urge the auctioning of the available petroleum blocks. “There is a very serious risk of corruption with this method, due to the lack of transparency and accountability… Most countries have abandoned this method, as experts recommend against using it. Guyana should no longer be awarding petroleum acreage via one-on-one negotiations after the Liza discovery in 2015,” Dr Mangal had said.
“After the Liza discovery in 2015, Guyana was in a position to use the method of competitive bidding for the award of leases…The Liza discovery de-risked Guyana, and as a consequence, all the major oil companies recognise that there is oil in the country. Hence, all the oil companies will be interested in bidding for leases in a transparent way, which ensures that Guyana incorporates market forces to maximise its share,” Dr Mangal had said.
Dr Mangal used the opportunity to reiterate that, “the petroleum advisor’s position has consistently maintained that competitive bidding is indeed the best approach for Guyana”.
He had also called the public’s attention to a direct correspondence from May 2017 with one such oil company attempting to acquire acreage via one-on-one negotiation.
According to Dr Mangal, that company was advised by him that: “Now that Guyana is on the radar post-Liza, it is my personal view that all future acreage should be leased in a way which maximises benefit to Guyana; hence, in a market-orientated way by an open bid round, to ensure competition. And acreage should not be negotiated one-on-one between the Government and a prospective developer.”
According to Dr Mangal, the risk of Government’s friends and family illegally obtaining leases will be significantly reduced if an independently managed and well-audited competitive bidding process is used.
“There is no rush to award more leases, since Guyana is already occupied with the developments in the Stabroek Block,” Dr Mangal had said.