Guyana gets mere 1% royalty in Tullow, ECO (Atlantic) contact

…50% profit oil

Government through the Natural Resources Ministry on Friday released its contract with Tullow Guyana BV and Eco (Atlantic) Oil and Gas, Inc revealing a one per cent royalty with 50 per cent profit oil agreement.
The terms of the contract are the same as those for Esso (Exploration and Production) Guyana Ltd and partners Hess and CNOOC Nexen and CGX.
“The Government’s share of Profit Oil specified in Article 11 Includes royalty payable by the contractor at the rate of one per cent of crude oil produces and sold,” the agreement stated.
In addition, the Government has agreed to stand the cost of all the company’s income taxes while exempting the contractors from the Property Tax Act, Value Added Tax and Corporation Taxes.
“There shall be no tax, duty-fee, withholding, charge or other impost applicable on interest payments, dividends, deemed dividends, transfer of profits or deemed remittance of profits from contractor, affiliated companies or non-resident sub-contractors in Guyana, including branches to a foreign office or to affiliated companies whether within or outside of Guyana.”
Additionally, the Production Sharing Agreement stipulates that all recoverable contract costs be recovered from the value of a volume of crude oil produced and sold from the contract area in any month to an equivalent amount of 75 per cent of the total production.
“The contractor shall have the right to use in any petroleum operations as much of the production as may reasonably be required by it therefore and the quantities so used or lost shall be excluded from any calculations of cost oil and or cost gas and profit and or profit gas entitlement,” the agreement stated.
Tullow Oil, parent company of Tullow Guyana BV is an oil and gas exploration and production company, which has interests in 90 exploration and production licences across 16 countries that are in West Africa, East Africa and ‘New Ventures’, which includes Guyana and French Guiana. Meanwhile, Eco (Atlantic) Oil and Gas, Inc was incorporated in January 2011 as Eco Oil and Gas Limited as a small independent international oil and gas exploration company based in Toronto, Canada.
The agreement, which was signed on January 14, 2016, sees Eco (Atlantic) Oil and Gas, Inc having a 40 per cent interest in the Orinduik Block while Tullow Oil has 60 per cent.
The Government said 3D seismic operations in the area were completed in early September 2017 and processing and subsequent interpretation follows with the possibility of drilling in 2019. It added that both companies are very optimistic about the prospects for recoverable petroleum in the Orinduk Block.