Latest update January 17th, 2025 6:30 AM
One percent royalty per barrel of oil just cannot work – Trotman
By Abena Rockcliffe-Campbell
The Government of Guyana and ExxonMobil continue to try to work out an agreement that will
Minister of Natural Resources, Raphael Trotman
sit well with both parties. This is as it relates to the royalty that is to be placed on oil per barrel, come 2020 when production is expected to begin.
While, according to Minister of Natural Resources, Raphael Trotman, there is no rate of royalty agreed upon as yet, it is generally accepted that one percent royalty will not bode well with the Government.
Trotman was clear that “we would not be giving out too many details when it comes to government’s negotiations with Exxon at this point”. However, he said that this is not because government wants to hide anything. “As I said before, we have nothing to hide.”
However, he emphasised, “What I can say to you is that we are yet to agree on a rate of royalty.”
Trotman continued, “We are working on it, because the original agreement says a one percent royalty to be paid…which is tantamount to zero.”
The Minister said that in principle it is accepted that “something has to be paid, it may not be at the prevailing industry rates but certainly it cannot be zero, we are not prepared to accept that. And, Exxon has agreed. So at some time we will have to agree and make that public.”
On a similar matter, Trotman commented that if some predictions are to come true, Guyana will be “even more wealthy”. This is as it relates to a survey done by Wood Mackenzie (a UK-based intelligence company) that oil prices will be in the US$50-60 per barrel range this year, and within the US$60-80 per barrel range in 2020.
This projection augurs well for an estimated two billion barrels of high quality crude has been discovered by Exxon. At the upward price of $80 per barrel, this would give the crude discovered so far a value of approximately US$160B.
Trotman indicated that Guyana is currently using a base line figure of US$50 per barrel.
He said however that “the price of oil is very unpredictable. We have reason to believe that it may go to US$80 but I cannot say there is anything certain about that, but every dollar above, Guyana stands to benefit more, so we welcome any increase in the price of oil”.
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