Prime Minister Samuel Hinds has said he is optimistic that this country would discover oil one of thesedays. He made the remark
during a presentation to the Parliamentary Subcommittee on Natural Resources, whenhe spoke on government’splan in relation to the exploration of petroleum inGuyana.The prime minister highlighted thatGuyana’s natural or potentialnatural resourcesare an opportunity for a brighter future forGuyanese. “It is hard work, it has its joys andfailures; and as in all natural resources, thereis a period of prospecting,and quite often what wesee is a result of a hundredattempts that werenot successful before, butserved as opportunities for training,” he said. During his presentation to the sub-committee,the prime ministerstated that severalwells have been drilled in Guyana since 1917,(11 offshore, three in the Takutu, and 11 in thecoastal areas). However,to date, no commercial discovery has been made. He believes that the lack of optimism is perhaps one of the reasons why this has not yet occurred. According to Hinds, the costs for exploratory wells are high, ranging between US$50M and US$100M. He is of the view that,
during a presentation to the Parliamentary Subcommittee on Natural Resources, whenhe spoke on government’splan in relation to the exploration of petroleum inGuyana.The prime minister highlighted thatGuyana’s natural or potentialnatural resourcesare an opportunity for a brighter future forGuyanese. “It is hard work, it has its joys andfailures; and as in all natural resources, thereis a period of prospecting,and quite often what wesee is a result of a hundredattempts that werenot successful before, butserved as opportunities for training,” he said. During his presentation to the sub-committee,the prime ministerstated that severalwells have been drilled in Guyana since 1917,(11 offshore, three in the Takutu, and 11 in thecoastal areas). However,to date, no commercial discovery has been made. He believes that the lack of optimism is perhaps one of the reasons why this has not yet occurred. According to Hinds, the costs for exploratory wells are high, ranging between US$50M and US$100M. He is of the view that, despite the failure to find oil and gas, the US Geological Organisation may be right in its pre-diction that the shores of
Guyana, French Guianaand Suriname currently have the largest unde-fined pool of oil and gas, which has since sparked widespread interest. The prime minister pointed out that govern-ment will be working on a “first come first served”
basis for teams that maywish to explore for oil and gas in Guyana, and will continue the current General Petroleum
Prospecting License that exists. This means that a particular area is made available upon request by the first person who approaches the GuyanaGeology and Mines Commission, provided that the area is unoccupied. “We have, at this time, a General Petroleum Prospecting Licence, which is a fairlystandard historical document that might be refined from time to times the world sentiments change, and we have a fairly standard posi-tion on production shar-ing. This recognises that costs are incurred in dis- covering and develop-ing a location where oiland gas may be recov-ered, and therefore it as-signs a certain amount of product to cost oil or gas,” the prime ministersaid. He said
there will be a sharing of agreed standards, andthat 40 per cent of the income that oil brings in will be used for profit sharing.
He emphasised that with an increase in the volume of oil discov- ered, government’s profitcan reach 70 per cent ormore. He explained that this cost has to be veri- fied, and if it is above 70 per cent in any year, ex-plorers are only allowedto take 70 per cent of theoil or gas recovered to cover cost. On the other hand, if it is less than 70 per cent, only 40 per cent goes towards profit shar-ing: “As volume increas-es and time goes, the gov-ernment’s percentage on profit oil would generally be increased to as much as 70 per cent.”In terms of the pro-duction-sharing type of agreement, it is explic-itly stated that the pro-duction share of the government is in place of royalties and cor-porate taxes. Another common approach for allocating areas to com-panies of interest is by‘bid rounds’. This meth- od was tried in earlier years, but it proved to beunsuccessful. However, with the advent of the US Geological Services study, there is grow-ing interest in the area, and this has prompted government to consider a ‘bid round’ approach, probably within the next two years.Prime Minister Hinds further said that three wells are expected to be drilled within 12 months. The wells will be located in the Takutu-Rupununi Basin. Two will be executed by REPSOL and CGX, who are operatingclose to the Suriname
boundary. According to the prime minister, one of the main challenges thus far is mov-ing the rigs and mobiliz-ing them at the drilling sites, an activity which could prove costly. Meanwhile, Vice Chairman of the Natural Resources Committee
of Parliament, Lance Carberry, called for government’s policy on oil and gas exploration in Guyana to be made available to all Members of Parliament. Carberry said he believes it is necessary at this initial stage. “It is necessary so that we can make in-
formed decisions, with-out any secrecy that will affect the entire pro-cess…” However, Prime Minister Hinds argued that a policy cannot be provided just yet, as it was attempted in the past to discover oil, but to date there has not been any success, except for the Takutu Basin, which later failed because of no proper storage.Hinds closed by say-ing that until that suc-cess is reached, govern-ment would not pursue putting an appropriatepolicy in place; but when a policy has been put in place, it would be made available to the house.
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