Set to redraw the nation’s offshore oil map
Guyana has signed new Production Sharing Agreements (PSAs) for two shallow-water offshore oil blocks. These are the first awards from the country’s inaugural competitive auction and serve as an early test of a stricter fiscal regime aimed at increasing the state’s revenue and diversifying the number of operators in the basin
Block S4 was awarded in November to a consortium led by France’s TotalEnergies, alongside QatarEnergy and Malaysia’s Petronas. In December, Ghanaian firm Cybele Energy secured Block S7, becoming the first African-led operator in Guyana’s offshore and the first woman-led exploration and production company to win a block outside Africa
If exploration on S4 and S7 yields commercial discoveries, the projects would broaden the set of producing operators offshore Guyana and push more volumes under the stricter fiscal terms. For now, the focus is on studies.
The deals stem from a bid round launched in 2022, when Guyana put 14 offshore blocks on offer in shallow and deepwater areas. Eight blocks received bids, including two that are still under finalization, earmarked for a Guyanese company. The government has said the auction was structured to broaden investor participation and reduce reliance on a single producing consortium.
The new contracts carry a 10% royalty and a 10% corporate tax, a cost recovery ceiling of 65% of crude produced, and a 50/50 split of profit oil between the state and the contractors. These terms, embedded in a new model contract, mark a sharp departure from Guyana’s 2016 deal for the Stabroek Block, which applied a 2% royalty and allowed up to 75% cost recovery.
The exploration period for S4 and S7 is five years, divided into two phases. In the first phase, companies must acquire and interpret seismic data, and they must also complete technical studies that map the subsurface. The second phase, which is optional and subject to ministerial approval of renewal, covers drilling exploration wells.
Guyana secured signing bonuses of USD15 million for S4 and USD17 million for S7, well above the USD10 million minimum set for shallow-water blocks.
TotalEnergies, which will operate S4 with a 40% stake, plans to lead investment of “tens of millions” of dollars in seismic and geophysical surveys to understand the block’s subsurface potential, according to Daniel Larrañaga, the company’s Vice President for Exploration in the Americas. Petronas holds 25% and QatarEnergy 35%.
Cybele’s S7, also in shallow water, lies in a proven oil fairway about 50 kilometers from ExxonMobil’s Liza fields, it said. A company fact sheet shared at the signing ceremony cites a conservative estimate of 400 million barrels of recoverable oil equivalent.
