New Guyana upstream contract model expected next month

Guyana’s government is due to release a draft of a new production sharing agreement (PSA) in February.

Finance minister Ashni Singh made the announcement during his 2023 budget speech to parliament.

“The expectation is for the new model PSA to be applicable for awards by the end of the first half of this year,” he said.

In November, vice president Bharrat Jagdeo outlined new fiscal terms which will apply to future PSAs.

The modifications include increasing the royalty rate to 10% from 2%, lowering the cost recovery cap to 65% from 75% and introducing a 10% corporate tax.

Singh added that articles related to work program commitments by operators will be strengthened and that an enhanced relinquishment mechanism will be put in place.

The minister also highlighted the establishment of the local content act and that the associated register now includes over 500 local companies and that over 29 five-year local content master plans have been approved.

Read Over 350 Local Content Certificates issued by Secretariat to date in Guyana and Guyana greenlights more five-year local content plans of oil and gas support companies

“The latest available information shows that Guyanese accounted for 64% of total employment within the [oil and gas] sector… additionally, the LCS [local content secretariat] also successfully unbundled contracts and reduced the payment period for Guyanese suppliers from 45 to 30 days,” Singh told lawmakers.

Also read Guyana: Budget 2023: $43.4B for gas-to-energy project to facilitate transition to renewable energy