Eco Atlantic Expects New Orinduik Oil Deal by September

Canadian firm Eco (Atlantic) Oil and Gas says it is making strong progress in negotiations with the Government of Guyana through the Ministry of Natural Resources for a new Production Sharing Agreement for the offshore Orinduik Block.

In a statement this week, Eco said that it and its partner Navitas Petroleum LP, an Israeli company, are in talks with the ministry to secure a new oil deal. The company said it expects negotiations for the new agreement to be completed during the third quarter of 2026.

The update follows statements by Minister of Natural Resources Vickram Bharrat, who confirmed that the Orinduik prospecting licence, which expired on January 14, 2026, was not extended. Bharrat said the companies have to apply for a new licence under the new Production Sharing Agreement.

The new Production Sharing Agreement, introduced by the current administration, features improved fiscal terms compared to the Stabroek and Orinduik agreements. It mandates a 10 percent royalty rate and a 10 percent corporate tax, and it lowers the cost recovery ceiling from 75 percent to 65 percent.

The agreement previously signed for the Orinduik Block featured a royalty rate of 1 percent on crude oil produced and sold, a 75 percent cap on cost recovery and no corporate income tax. Similar to the Stabroek Block deal, the Minister of Natural Resources is required to pay the companies income tax from the government’s share of profit oil.

Eco holds a 100 percent working interest in the 1,354 square kilometre Orinduik Block and an indirect working interest in the 4,800 square kilometre Canje Block, through JHI Associates.

Eco President and Chief Executive Officer Gil Holzman previously disclosed that Eco and JHI remain engaged with the Government of Guyana regarding a potential extension or reissuance of JHI’s Canje Block offshore, in parallel to Eco’s ongoing discussions with the ministry on the terms of the Orinduik Block.

The Orinduik Block is situated in shallow water, 170 kilometres offshore Guyana. In 2019, two oil discoveries were made at Jethro 1 and Joe 1, with both wells encountering high quality reservoirs containing mobile heavy crude. Despite the expiration of the licence for that block, Eco has outlined that provisions under the Petroleum Act allow it to retain rights to its Jethro 1 and Joe 1 discoveries while its appraisal programme is under review. The company has shared that both the ministry and the Guyana Geology and Mines Commission have received the relevant joint submissions relating to the proposed appraisal work.

The gap between the old and new fiscal terms is significant, and it explains why these negotiations have stretched on rather than concluding quickly. A royalty rate rising from 1 percent to 10 percent, paired with the introduction of a 10 percent corporate tax and a tighter cost recovery ceiling, represents a meaningful shift in how much of the eventual production revenue flows to the state versus the operator. For a company sitting on two heavy crude discoveries that have yet to reach a final investment decision, accepting materially less favourable terms than its original licence carried is not a small commercial adjustment.

Eco’s confidence in a third quarter conclusion also signals that both sides may have found enough common ground to move past the licence lapse that occurred in January. Heavy crude developments tend to carry higher processing and marketing costs than the light crude produced at Stabroek, which makes the final terms of cost recovery and royalty treatment especially consequential for whether Jethro and Joe ultimately advance toward development. How Guyana balances its standardised new fiscal framework against the practical economics of a heavy oil project will be worth watching as the September deadline approaches.

SOURCE
Kaieteur News, “Canadian company expects new Orinduik oil deal by September,” July 3, 2026.