Guyana’s Petroleum Activities Act 2023: licensing and petroleum agreements

The Act, commencement and repeal

The Petroleum Activities Act 2023 (Act No. 17 of 2023) was passed by the National Assembly on 9 August 2023 and published in the Official Gazette (Extraordinary) of 16 August 2023. Section 1(2) provides that the Act comes into operation on a date appointed by the Minister by Order. A readable OCR text of the Gazette Act was used for this note, hosted on the official e-gazette and also available from Parliament and FAOLEX. This review has not itself re-opened a readable text of the commencement Order. The Ministry of Natural Resources treats the 2023 Act as the statute now in force, and current programme materials are published at petroleum.gov.gy. Counsel should confirm the appointed day from the commencement Order before relying on a particular date.

The Act repeals the Petroleum (Exploration and Production) Act (Cap. 65:04) and the Petroleum (Production) Act (Cap. 65:05). Subsidiary legislation, directions and appointments made under the repealed exploration and production legislation, and in force immediately before the 2023 Act came into operation, continue as if made under the new Act. Operators, contractors and lenders should therefore read existing licences and agreements against the 2023 statute, and should not assume that pre-2023 subsidiary instruments have simply fallen away.

Property in petroleum, the Minister, and petroleum agreements

Section 3 vests the property of petroleum existing in its natural condition in strata in the national territory in the State. Section 4 provides that the Minister shall be responsible for the administration of the Act, including the general management of the petroleum resources of Guyana. The Act does not establish a Petroleum Commission. The Minister’s powers and duties, set out in section 5, include the licensing of petroleum exploration, development, production, transportation and storage operations (including the geological storage of carbon dioxide); the prescribing of subsidiary legislation; coordination on environmental and safety aspects; monitoring of operations; and the development of terms of reference and qualification criteria. Those powers are to be exercised in conformity with any general or specific directions given by the Cabinet, and may be delegated in writing to a public officer or agency of the State, subject to the Minister’s continuing power and to review.

Section 12 provides for a petroleum agreement. A production sharing agreement, or other petroleum agreement, should be read together with the Act, and not as if it were a substitute for it. The Ministry of Natural Resources has published model production sharing agreements for deepwater and shallow-water areas. Those models are a starting point for negotiation; the terms that bind the parties are those of the agreement actually entered into, read with the Act and any licence granted under it.

Licensing: competitive tender, direct negotiation and field development plans

Section 7 is the principal provision on how a licence is granted. A licence under the Act shall be granted by the Minister through the process of competitive tender; or by direct negotiation, where the Minister, acting on the directions of Cabinet, determines that special circumstances exist which, in the national interest or national security, justify the use of direct negotiation. For a competitive tender, the Minister may, by notice in the Gazette, invite applications in respect of a specified area, specify the period within which an application may be made, and specify the conditions subject to which an application may be made. After receipt of applications, the Minister may select, for further negotiation, the most substantially responsive bidder. An exploration or production licence shall not be granted to an applicant in respect of an area already comprised in an exploration or production licence granted to another company.

Section 8 requires the Minister, for the purposes of a Gazette invitation under section 7(2), to prescribe qualification criteria by Notice published in the Gazette. Those criteria may include technical qualifications (which may vary by geography or water depth), financial qualifications commensurate with the resources needed, safety and environmental policies, previous performance in petroleum operations, and a financial undertaking for a bonus bid. Restrictions on the persons to whom a licence may be granted, and a prohibition on a government official holding an interest in a licence, are separately provided for. The Act also makes provision for ancillary rights, while providing that a licence does not authorise an act that is prohibited, or that is regulated otherwise than in accordance with, another written law.

A petroleum production licence is the subject of Part IV. An application is to be accompanied by a field development plan for the construction, establishment and operation of all facilities and services for, and incidental to, the development, production, processing, storage and transportation of petroleum from the proposed production area. Where a licensee does not submit such a plan and the Minister has not extended the time, the discovery area is surrendered. Section 34 provides that a production licence shall not be granted unless, among other things, the proposed field development plan would ensure the most efficient development, production and beneficial use of the commercial discovery; the applicant has adequate financial resources and technical and industrial competence and experience; the applicant’s plans for local content comply with the Local Content Act 2021; and the plan takes into account best international industry standards and practices. The Minister shall not refuse an application without first giving notice of the grounds and a reasonable opportunity to make representations or to remedy a default or amend proposals.

Where an exploration area in which a discovery has been made has been surrendered, the Minister may solicit applications for petroleum production licences by competitive tender or by direct negotiation. Applicants in that case must meet the prescribed qualification criteria, and, in the case of a competitive tender, the terms published in the Gazette, and must still submit a field development plan.

A company proposing to participate in exploration or production will also need to consider, separately, company registration, tax, immigration, environmental authorisation under the Environmental Protection Act, and, where the Local Content Act 2021 applies, the local content regime described in the firm’s [note on that Act](/insights/guyanas-local-content-act-2021). Fiscal terms may also be found in the particular petroleum agreement; they should not be treated as a general statutory code, as explained in the firm’s [note on energy-sector taxation](/insights/energy-sector-taxation-in-guyana). Those requirements do not arise from the Petroleum Activities Act alone.