In a landmark move for its burgeoning oil industry, Guyana has officially signed its first Production Sharing Agreement (PSA) under the new Petroleum Activities Act and updated fiscal regime. The agreement with a consortium led by TotalEnergies, which includes QatarEnergy and PETRONAS, secures a US$15 million signing bonus for the Shallow-Water Block S4.
The signing, held at the Pegasus Corporate Suites, represents a key outcome of Guyana’s inaugural licensing round launched in 2022. This agreement marks a significant shift in the country’s oil and gas sector, implementing stricter fiscal terms, including a 10% corporate tax, enhanced environmental safeguards, and enforceable penalties for non-compliance.
Minister of Natural Resources, Vickram Bharrat, hailed the agreement as a testament to the government’s success in establishing a world-class petroleum governance framework while fostering investor confidence. He emphasized the importance of transparency and accountability in the management of oil revenues.
“This is the first agreement we are signing under the new fiscal regime. The negotiations have produced a US$15 million signing bonus that will be paid directly into the Natural Resource Fund within 50 days,” stated Minister Bharrat.
The S4 Block spans approximately 1,788 square kilometers in shallow waters off Guyana’s coast and will be operated by TotalEnergies, which was selected as the most responsive bidder during the competitive process.
Michael Munroe, Director of the Local Content Secretariat, described this agreement as a milestone achievement resulting from rigorous negotiations under the updated legislative framework. He stressed that the new PSA includes provisions for penalties related to work programme failures, ensuring that decommissioning liabilities are adequately addressed.
“The S4 consortium was deemed the most responsive bidder, demonstrating professionalism and collaboration throughout the process,” Munroe said.
Minister Bharrat further noted that the involvement of QatarEnergy and PETRONAS, along with TotalEnergies, enhances Guyana’s reputation as an attractive frontier for oil exploration. He highlighted the growing list of major players in the region, including Exxon, Chevron, and CNOOC.
These partnerships are seen as a strong endorsement of Guyana’s regulatory systems and commitment to local content legislation. Bharrat acknowledged the remarkable increase in the country’s petroleum production, which has surged from 80,000 barrels per day in 2020 to an impressive 920,000 barrels currently.
In light of global concerns regarding fossil fuel dependency, the Minister reiterated Guyana’s commitment to responsible resource development alongside its Low Carbon Development Strategy (LCDS 2030).
“We are proud to say that we are managing our oil and gas sector responsibly, maintaining high environmental standards while expanding opportunities for our people,” he said.
The S4 agreement stems from the 2022 Guyana Licensing Round, inviting global energy companies to bid under the modernized Petroleum Activities Act and strengthened Local Content framework. The consortium is expected to adhere to international best practices in environmental protection and community engagement.
The Government has assured that all proceeds, including the signing bonus, will be transparently managed through the Natural Resource Fund, reflecting Guyana’s dedication to prudent fiscal management and sustainable national development.
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