Introduction

In a groundbreaking development for African energy companies, Cybele Energy Ltd., led by President Beatrice Mensah-Tayui, has secured a Petroleum Exploration License for Shallow Water Block S7 in Guyana. This historic achievement marks Cybele Energy as the first African company to obtain an oil block in Guyana and the first African operator to secure such a license in South America and the Caribbean.

This milestone underscores the growing economic and diplomatic ties between Ghana and Guyana and highlights the potential for enhanced Africa-Caribbean business cooperation. The agreement, facilitated by Africa Legal Associates (ALPi Ghana), represents a significant step forward in global energy exploration and African leadership in the sector.

Key Points

Background

The Journey to Securing Block S7

The journey to this historic achievement began in December 2022, when the Government of Guyana announced a competitive bidding process for 14 offshore blocks (11 shallow water and 3 ultra-deep water). Cybele Energy, with the support of Africa Legal Associates (ALPi Ghana) and its Guyana-based partner, ALA Strategic Consult Guyana Ltd., successfully navigated the complex bidding process.

Out of the 8 blocks awarded, Cybele Energy secured Block S7, one of the most promising shallow-water blocks. The process involved extensive legal, commercial, and strategic work, including bid preparation, due diligence, negotiations, and regulatory engagements.

Collaboration and Support

The success of Cybele Energy was made possible through close collaboration with key partners:

• Africa Legal Associates (ALPi Ghana): Provided legal and strategic guidance throughout the bidding process.
• ALA Strategic Consult Guyana Ltd.: Offered local expertise and support in Guyana.
• Ghana Chamber of Commerce Guyana: Facilitated business and diplomatic connections.

Nana Adjoa Hackman, Managing Partner of ALA, expressed her optimism about the future: “Working with Ms. Mensah-Tayui and her dedicated team over the years has been an enriching experience, and we look forward with optimism to the next phase of exploration and development on Block S7.”

Analysis

Strategic Importance of Block S7

Block S7 is located in the prolific Guyana offshore basin, a region known for its significant oil and gas reserves. The block lies along the same geological fairway that hosts world-class discoveries such as Liza 1 and Liza 2, as well as Repsol’s Carapa-1 finding. This strategic location enhances the block’s potential for substantial oil reserves.

Economic and Operational Benefits

According to Cybele Energy’s technical analysis, Block S7 offers several key advantages:

• Recoverable Reserves: Estimated at up to 400 million barrels of oil.
• Production Potential: Up to 160,000 barrels per day from approximately 8 production wells.
• Cost Efficiency: The shallow-water location (100 km offshore) allows for the use of an onshore early production facility (EPF), reducing costs compared to deepwater FPSO-led developments.
• Favorable Terms: Under Guyana’s Production Sharing Agreement, shallow-water operators benefit from a 65% cost-recovery provision, enhancing profitability.

Local Content and Community Development

Cybele Energy’s project includes significant commitments to local content and corporate social responsibility (CSR). These initiatives aim to deliver enduring value to the people of Guyana through:

• Training and Education: Programs to develop local skills and expertise.
• Logistics Infrastructure: Investments to support local operations.
• Healthcare and Housing: Potential investments in community healthcare and housing projects.
• Offshore Service Capacity: Development of local offshore service capabilities.

Practical Advice

Lessons for African Energy Companies

The success of Cybele Energy offers valuable lessons for other African energy companies looking to expand internationally:

• Strategic Partnerships: Collaborate with local and international partners to leverage expertise and resources.
• Thorough Due Diligence: Conduct comprehensive research and analysis to identify high-potential opportunities.
• Regulatory Compliance: Ensure adherence to local regulations and engage with regulatory bodies early in the process.
• Community Engagement: Prioritize local content and community development to build strong relationships and support.

Opportunities in Guyana’s Energy Sector

Guyana’s emerging energy sector presents significant opportunities for international investors. Key considerations include:

• Favorable Geology: The Guyana offshore basin is known for its high-potential oil and gas reserves.
• Supportive Regulatory Environment: Guyana’s Production Sharing Agreement offers attractive terms for operators.
• Growing Infrastructure: Investments in logistics and production facilities are enhancing operational capabilities.
• Diplomatic and Economic Ties: Strengthening relationships between Africa and the Caribbean can facilitate business cooperation.

Frequently Asked Questions (FAQ)

What is the significance of Cybele Energy securing Block S7 in Guyana?

Cybele Energy’s acquisition of Block S7 marks a historic milestone as the first African company to secure an oil block in Guyana. This achievement highlights the growing economic and diplomatic ties between Africa and the Caribbean and demonstrates the potential for African leadership in the global energy sector.

What are the estimated reserves and production potential of Block S7?

Block S7 is estimated to hold up to 400 million recoverable barrels of oil, with a potential daily production capacity of up to 160,000 barrels. The block’s shallow-water location allows for cost-effective development using onshore early production facilities.

How does Guyana’s Production Sharing Agreement benefit operators?

Under Guyana’s Production Sharing Agreement, shallow-water operators benefit from a 65% cost-recovery provision, which enhances the economic viability of exploration and production projects. This favorable terms make Guyana an attractive destination for international energy companies.

What commitments has Cybele Energy made to local content and community development?

Cybele Energy has committed to significant local content and CSR initiatives, including training programs, logistics infrastructure investments, and potential projects in healthcare, housing, and offshore service capacity. These initiatives aim to deliver lasting value to the people of Guyana.

What role did Africa Legal Associates play in securing Block S7?

Africa Legal Associates (ALPi Ghana) provided legal and strategic guidance throughout the bidding process, working closely with Cybele Energy and local partners in Guyana. Their expertise and support were instrumental in navigating the complex regulatory and commercial landscape.

Conclusion

The historic achievement of Cybele Energy in securing Block S7 in Guyana represents a significant milestone for African energy companies and highlights the potential for enhanced Africa-Caribbean business cooperation. This landmark agreement underscores the growing economic and diplomatic ties between Ghana and Guyana and demonstrates the capabilities of African leadership in the global energy sector.

With estimated reserves of up to 400 million barrels of oil and a potential daily production capacity of 160,000 barrels, Block S7 offers substantial economic benefits. The shallow-water location and favorable terms under Guyana’s Production Sharing Agreement further enhance the project’s viability.

Cybele Energy’s commitment to local content and community development ensures that the project will deliver enduring value to the people of Guyana. This achievement serves as a model for other African energy companies seeking to expand internationally and highlights the importance of strategic partnerships, thorough due diligence, and community engagement.