With optimism high about oil and gas production in Guyana being inevitable and much talk about the tremendous economic benefit this can bring to Guyana, many may be disappointed to learn that, according to sources, the country will receive less than 12 per cent of oil revenue when production starts within the next few years.
According to sources, Guyana’s chunk of any oil revenue was pegged at less than 12 per cent. ExxonMobil anticipates it will begin pumping oil by 2020 – about 100,000 barrels per day in the initial stages.
The Government was expected to renegotiate the exploration contract with ExxonMobil, but what is not known is if this 12 per cent is what was agreed to initially when this contact was inked 17 years ago or what was derived from the renegotiation process.
When contacted, Natural Resources Minister Raphael Trotman said he was travelling in an emailed response and did not respond to Guyana Times’ follow-up email for a comment on the issue.
In July, Finance Minister Winston Jordan had insisted that he requested a review of the contract with ExxonMobil, since this was Government’s way of ensuring that Guyana got the best possible deal from the extraction of oil when production began.
“At the end of the day… you have to say whether we are doing what is best for the interest of the national population and I can tell you we are indeed doing that. A 2009 agreement or 2006 agreement or whenever the agreement was originally made was at a time when there was no discovery of anything, now there is oil,” Minister Jordan had said.
While there has been much talk from the Government about the potential of oil revenues to transform Guyana, there has been very little information on what exactly is the Government’s share of the earnings.
Already Guyanese were told not to expect too many jobs in the oil and gas industry here, as most of the jobs will be for foreigners with the requisite expertise.
On May 20, 2015, ExxonMobil announced a significant oil discovery in the Stabroek Block with its Liza 1 well hitting more than 295 feet of high-quality oil-bearing sandstone reservoirs. Then, there was a second announcement in June 2016 that the drilling results from the Liza 2 well, the second exploration well in the Stabroek Block, located some 120 miles offshore Guyana, confirmed a “world-class discovery” of oil with a recoverable resource of between 800 million and 1.4 billion oil-equivalent barrels. Exxon’s Liza 3 well was spud last month and that result is expected in coming weeks.
ExxonMobil Corp was recently fined a whopping US$74 billion for underpaying royalties in the central African nation of Chad where the company has been drilling for 15 years.
According to international reports on the mega fine by Chad courts, the amount is about five times more than that country’s Gross Domestic Product, which the World Bank estimates at US$13 billion. The High Court in the capital, N’Djamena, announced its ruling on October 5 in response to a complaint from the Chad Finance Ministry that a consortium led by ExxonMobil had not met its tax obligations. The court also demanded the Texas-based oil giant pay US$819 million in overdue royalties.
