Weeks after its own self-imposed deadline expired, the Guyana Government has begun the process of releasing the contracts between the state and other oil companies – beginning with Canadian company CGX Resources Incorporated.
Under the Article 11 ‘Cost Recovery and Production sharing’ heading of the contract, the Government agreed to a one per cent royalty. In addition, a 53 per cent share of profit oil and gas; after recoverable costs have been satisfied was negotiated. This is providing the company moves from exploration to production. This is payable to the government’s coffers monthly.
Also apparent in the CGX contract is that the Canadian company relinquishment clause is a comprehensive one. The company is required to release 15 per cent of its concessions back to the state after the initial period it is granted expires. After this period, future renewals will incur a 25 per cent relinquishment. This was invoked last year, when the Canadian company gave up 25 per cent of its concessions after renegotiating its work commitments.
In a statement that accompanied the news that the contract was released, the Natural Resources Ministry promised that “over the coming weeks and months, as all aspects for the release are worked out with the operators, the remaining Agreements will be released in similar fashion.”