Latest update November 15th, 2024 1:00 AM
ExxonMobil oil agreement…Guyana to get 50% of oil or profits
Under the agreement signed between the government and ExxonMobil and its partners, Guyana will be entitled to 50 per cent of the proceeds from whatever oil and gas resources are extracted by the company in the Stabroek Block.
Natural Resources Minister, Raphael Trotman
This is ensured under the Production Sharing Agreement (PSA) which exists between Guyana and the company, according to Minister of Natural Resources Raphael Trotman. The Minister was at the time addressing the media at a breakfast forum organised by his Ministry at the Herdmanston Lodge.
A PSA is usually signed between governments and companies involved in resource extraction to determine how much of that resource the parties will receive.
The Minister said that Guyana may choose to receive its portion in oil after which the country would have to make a decision as to where the oil would be refined. Currently there is a consultancy being done to determine whether Guyana should invest in its own oil refinery.
However, Trotman informed that taking that direction may not be economical in the future. He said that the government is considering sending its share of oil to either Trinidad and Tobago or Suriname.
Trotman informed the media that based on the agreement, Exxon and its partners will share 50 per cent between themselves and the Government of Guyana will share the remaining 50 per cent. According to the Minister this arrangement is not unreasonable.
Further, he stressed that calculating 800 million barrels of oil at a cost of US$50 per barrel should give Guyanese an idea of how much money the country stands to make and the value of the oil. He clarified that the 50 per cent stake will be taken after cost recovery is done.
According to Trotman, the cost of developing the well will have to be taken out first before any division is done.
On the issue of making the contract public, the Minister said that the contract applies to the entire Stabroek Block. Therefore, whatever is found in that area by ExxonMobil and its partners will be subject to that contract.
He added that government has started the process of reviewing the contract in order to update it so that any future arrangement will be contemporary with what is prevailing in the industry. This process he said is being done by both local and foreign experts.
The Minister informed that the contract which was signed in 1999 has maintained largely its original form.
“We inherited the contract from the former government. Government took the decision to look at but avoided reopening the contract in its entirety for negotiations.
“We didn’t want it to go abroad that Guyana was a place where we didn’t respect the sanctity of contracts entered into and we thought it best to preserve what we had found, it was not altogether a bad contract.”
According to country manager of ExxonMobil, Jeff Simons, based on how the contract is written, Guyana will have its share, ExxonMobil will have its share and its partners, Hess and Nexxen Petroleum will have their share.
“So there will be individual liftings that will go to the tankers and each has the right to move that oil to wherever they want to take it. All the partners have a share.”
As it relates to making the contract public, Trotman said that government at this time is of the view that full disclosure would not be in the national interest.
To justify this position, Trotman made reference to the biblical story of Hezekiah, a king who had exposed the riches of his nation to the Syrians; after which the prophet Isaiah accosted him for exposing all his possessions, telling him that all will be lost.
According to Trotman, Guyana has no army that can stand against a major aggressive force. The Minister was making reference to the border controversy Venezuela currently has with Guyana.
“It (Guyana) has no air-force, it has no navy. We are proceeding this year in a very delicate year. We are possibly headed into a mediated process with a Good Officer appointed by the UN (United Nations) Secretary-General and if by the end of November it shows that there is no likelihood of a negotiated or mediated settlement, we are headed to a juridical settlement of a longstanding claim.”
Trotman said that he would advise President David Granger not to be boastful of what Guyana has in the interest of full disclosure. He said that such information is being recorded and can be used against the government.
However, Trotman assured that the government is prepared to share the salient points of the contract.
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