Latest update November 29th, 2024 1:00 AM
Former presidential advisor says… Govt. should publish its economic model for Stabroek Block projects – Dr. Mangal
By Kemol King
Former Presidential Advisor on Petroleum, Dr. Jan Mangal, is urging that Government release its economic model for Stabroek Block projects for public scrutiny.
Former Presidential Advisor, Dr. Jan Mangal
The Oil & Gas Consultant made the comment pursuant to a discussion about how an Inter-American Development Bank (IDB) model for Liza – Phase One, and a subsequent extrapolation to include Liza – Phase 2, led him to conclude that Guyana could lose US$5B in revenue, because the Government granted a permanent tax holiday to ExxonMobil and its partners for their operations on the Stabroek Block.
That is just one of the aspects of the contract pinpointed by commentators as unfair and lopsided.
Public discourse has been rife with questions about what Guyana will get from oil production in the Block, since the Production Sharing Agreement (PSA) governing those operations has been repeatedly criticised as lopsided and unfair.
Public commentators have, like Dr. Mangal, projected that Guyana could lose billions – not just from the tax holiday granted to ExxonMobil, Hess and CNOOC, but from several sections of the contract.
Governments, in their perusal of economic projects, usually produce economic models to determine the risks and benefits associated with those projects.
Dr. Mangal said that he advocated for Government to develop a model when he served as the President’s advisor, as he is adamant that it is critical to have.
Government has not been very forthcoming in responding to all of the contentions with the numerous aspects of the contract which have been pointed out as financially detrimental to Guyana’s success in the very lucrative global petroleum industry.
Yet, it gave ExxonMobil the approval for Liza – Phase One and the operator has already started producing oil there. Government has also approved Liza – Phase Two. ExxonMobil intends to start production there in 2022.
ExxonMobil has applied for approval for a third field development, Payara. That awaits a review by Government and a Consultant, which Government has indicated it needs, to hold its hand through the process.
The International Monetary Fund (IMF) has projected that Guyana’s Gross Domestic Product (GDP) will increase substantially in 2020, but indicated that most of that wealth will leave Guyana with the foreign companies. It stated that Guyana will be getting 14.5 percent of oil revenues, and that revenues will not be substantial in the early years. It does expect, though, that revenues for Guyana will see an increase, once Exxon and its partners recoup their investment. The Inter-American Development Bank has made similar comments.
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