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Guyana’s take from oil is larger than many countries
DEAR EDITOR,
In a recent letter, Darshanand Khusial makes two points: Warren Buffet is a great investor and our oil contract is flawed. While he is right that Mr. Buffet is a great investor, his claims about our oil contract are inconsistent with the facts.
Mr. Khusial’s demand that we renegotiate the contract makes it seem like we are receiving a paltry sum of the oil revenue, but this is just not true. As it stands, the oil industry will generate more money for Guyana than we have ever seen before. Exxon estimates that we have approximately 4 billion recoverable barrels of oil.
Looking at different oil price scenarios, analysts estimate that our total government revenue over the next couple decades could range from US$51billion to US$160 billion.
As you can see, we are not just letting Exxon develop our oil in exchange for crumbs. This is an enormous amount of money that will be a catalyst for growth and prosperity in Guyana.
Mr. Khusial also claims that we are receiving a much lower percentage than what many other nations have got in their oil contracts, but this statement is misleading if not looked at in context. According to Rystad Energy’s report, the Guyana government take is 59 percent of total profits. When you look at other countries with no previously known resources or oil and gas infrastructure, our government’s take is right in the middle of the pack internationally.
It is also interesting to note that our average government take is higher even than countries like Australia, Canada, Israel, the United Kingdom, and the United States.
In fact, to initially attract an oil company like Exxon, we had to offer favourable economic terms.
However, as the IMF report explains, because it is now established that Guyana is blessed with huge oil reserves, we are in a position to adjust our fiscal terms for future oil contracts.
Contrary to what Mr. Khusial says, it would not be more prudent to renegotiate our oil contract with Exxon. Doing so would bring uncertainty and could delay development for a decade and even jeopardize the project entirely. What we should do, though, is start preparations for how we are going to infuse our newfound oil revenues back into Guyana and improve the lives of all Guyanese.
Sincerely,
Clement Smith
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