More info on contract needed – economist

…to facilitate informed discussions

An economist is calling for more details on the oil and gas agreement, which the Government has so far been reluctant to release to the general public based on “advice received”.

Former Presidential Advisor Ramon Gaskin, in a recent interview, said it was impossible for the ordinary people of Guyana to get an accurate understanding of how much Guyana stood to benefit, through the sole platform of the consultations being held.

Instead, he called for the release of the agreement. Gaskin likened the secrecy surrounding the agreement to that surrounding the parking meter agreement between City Hall and a private company. When the details had finally been released, it had precipitated street protests.

“You cannot get an understanding of the ExxonMobil agreement until it is public, so that people can read it. All these consultations and seminars, but we cannot get to read the document.”

“We need to see these things,” Gaskin stressed. “It has to be laid in the National Assembly and it has to be debated and we have to be able to read it and study it, but we haven’t been able to see it.”

He noted that the public’s lack of information, besides what royalty payments Guyana would accrue, extended to how much taxes Exxon would pay when it did start production.

Among some of the questions the economist had was the amount of taxes the government would be collecting from ExxonMobil. He queried whether Exxon would be paying any Corporation or Capital Gains taxes, and if so, how much.

Capital Gains taxes may apply in the event that Exxon sold or acquired new blocks. At present, ExxonMobil owns 45 per cent of the oil block, while Hess Guyana Exploration owns 30 per cent and a Chinese company, CNOOC Nexen Petroleum Guyana Ltd, holds a 25 per cent interest.

Corporation taxes apply to income and profits. Some companies are subject to as much as 40 per cent taxes on chargeable income. The Corporation Tax Act Cap. 81:03 sets out the companies exempt by law from the minimum tax, which include companies deriving a percentage of their income from tourism or agriculture, and insurance companies.

“We have to keep demanding that the Government publish it. How will you have consultations if we do not know what is inside (the contract)? (At this point, it’s) just talking and speculating. We have to see the contract, so we can have a proper discussion on it.”

While the economist has stressed accountability and transparency on the agreement, Natural Resources Minister Raphael Trotman has stated publicly that full disclosure of what has been agreed between Exxon and Guyana would not be a good idea.

He was at the time addressing members of the local press during a media breakfast at the Herdmanston Lodge. Along with him was Exxon’s Country Manager Jeff Simmons.

According to the Natural Resources Minister, there is absolutely no need for Guyana to be making noise about its oil find, as that could have consequences at this stage.

The current Administration had inherited from the former Administration a contract which was signed in 1999. Trotman said Government took a decision to examine the legal document, but avoided reopening it in its entirety for negotiations.

It is possible, however, for the contract to be updated so that future arrangements could complement the industry.

“We did not want it to go abroad. Guyana is a place where we didn’t respect the sanctity of contracts entered into, and we thought it best to preserve what we have found. It was not altogether a bad contract… full disclosure will not be to the national benefit or interest,” he told Journalists.  

“I am saying don’t let’s go out there shouting with the interest of full disclosure. Everything we say and do as a government is being recorded, and will be used against us. We are prepared to share the salient features of the contract, which is a 50/50 partnership production share agreement; which means that Exxon and its partners will share 50 per cent among themselves and the Government of Guyana will share 50 per cent,” he had said. Negotiations are currently being undertaken between Guyana and Exxon on the rate of royalty to be paid per barrel.