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Exxon paid US$5.6B in income taxes in 2020 – Guyana got nothing
ExxonMobil Chair and CEO, Darren Woods (Photo: Shaban Athuman/The Dallas Morning News)
Kaieteur News – Supermajor, ExxonMobil paid US$5.6 billion in income taxes last year, accounting for its global operations.
This was revealed during its 2020 Q4 earnings call yesterday.
ExxonMobil’s Chief Executive Officer (CEO) and Chairman, Darren Woods said “We remain focused on increasing long-term value for our shareholders by investing in our highest-return assets, preserving the strength of the balance sheet, and paying a reliable dividend.”
Exxon’s 2020 income tax expenses amount to nearly four times Guyana’s 2020 budget. But Guyana received nothing from ExxonMobil, its partners, affiliates and sub-contractors in income taxes because former Minister of Natural Resources, Raphael Trotman negotiated a contract for Stabroek block operations which grant them a permanent tax waiver of all taxes.
Similarly, Executive Vice President and Chief Financial Officer of Hess, John P. Rielly, revealed during the company’s earnings call last week, that it projects its exploration and production (E&P) income tax expenses to amount to US$80-90M in 2021. Guyana will get nothing.
ExxonMobil is the operator of the Stabroek block with a 45 percent stake, while Hess has a 30 percent stake.
The agreement’s tax article also allows for Guyana to give the companies tax certificates which show that their tax liabilities, which Guyana is responsible for paying, are taken care of.
Guyana would be forfeiting US$653 million in taxes by 2025, according to Director of Finance at the Institute for Energy Economics and Financial Analysis, Tom Sanzillo.
The contract is notably kept firmly in place by a rigid stability clause which requires the approval of the Stabroek block partners for it to be renegotiated. It has been criticised for years, and major party leaders as well as the Stabroek block partners have refused.
If the government tries to unilaterally renegotiate the tax provision or any other provision in a manner that affects the economics of the agreement, it would be bound to compensate the contractors for any losses they incur. If the government adjusts its tax laws or code in a manner that affects the contract economics, Guyana would have to allow Hess and its partners to supersede and be exempt from the amendment.
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