PNCR agrees ExxonMobil misleading Guyanese with billboards

Dec 20, 2022 News

…says 52% is calculated from a fraction of total revenue

Kaieteur News – The People’s National Congress Reform (PNC/R), the largest political Opposition party in the country has agreed with its Coalition partner, the Alliance For Change (AFC) that oil giant ExxonMobil is misleading the populace by erecting billboards across the country to inform that Guyana is getting some 52 percent from the Stabroek Block oil deal.

Economist Elson Low

At a recent press conference, the Leader of the Party, Mr. Aubrey Norton was asked to explain what the country’s total share is from the offshore oil and gas activities. He explained that owing to a renegotiation of the deal – by the former A Partnership for National Unity + Alliance For Change (APNU+AFC) government- the oil company is not allowed to recover the two percent royalty being paid to the country, which means the revenue for Guyana has increased.

On the other hand, he requested that Economist Elson Low, the party’s spokesperson on petroleum matters, clarify what Guyana is earning from the 2016 Production Sharing Agreement (PSA) with Exxon. Low sought to first point out that there is a difference between revenue and profit. “Guyana is not getting 52 percent of the revenue, we are getting 52 percent or just around about that or a little bit more of the profits- now that is because of course cost oil, which is the cost of development, exploration and production must first be removed and then we get 52 percent of the profits there,” the Economist explained.

On this note, he stressed that a thorough audit must be conducted to ensure Guyana’s share of profits is not reduced through the funding of inflated costs of production. Low said, “We don’t know if that’s the case, but it is possible the costs are being inflated…this needs to be done properly. We have seen the government produce or at least, they are about to release an audit that has very serious questions about whether or not it will even address what the plain words of the PSA say which is that we can only have cost recovered if they are reasonable cost, if they are competitive cost- so we have to see that audit and we have to scrutinise that and we need the government to come clean as to what exactly they have asked these auditors to do because it could very well be that the country is getting much less than the words of the PSA says that it should get…”

In fact, the Economist sought to point out that if the Stabroek Block deal changes, Guyana could still lose US-billions if it fails to boost its auditing capability. As such, he explained, “to say that we are getting 52 percent, to say that we are not getting 52 percent is unclear until there is an audit. That is why we must audit.”

Ganesh Mahipaul demonstrates how Guyana gets half of the profits after 75% is taken away by Exxon to recoup expenses. The politician argued that his left hand gives an idea as to what Guyana gets, while his right hand shows what the oil company walks away with.

Meanwhile, Ganesh Mahipaul, a member of the PNC/R in an attempt to further break down the party’s position stressed the fact that 75 percent is taken away from the total revenue from oil towards the cost of development; whereas the remaining 25 percent is then shared between government and Exxon. “So the 52 percent that they speak of, they have to explain it a little bit more for the ordinary Guyanese to understand. It is 50 percent of the profit and two percent royalty- so it is just a portion or a small piece, a fraction of the entire total revenue that comes from our oil, so the AFC is correct when they say that the nation is being misled to believe its 52 percent of the total revenue. It is not 52 percent of the total revenue.”

The AFC recently told Kaieteur News that the billboards erected by American oil giant, ExxonMobil are set out to mislead Guyanese and silence genuine concerns regarding the lopsided contract that governs the Stabroek Block, in which the oil company enjoys the majority of the benefits.

It was reported that the oil company erected a number of billboards across the country claiming that Guyana is getting 52 percent of the profits from the Stabroek Block. The Publisher of this newspaper, Mr. Glenn Lall has since challenged the company’s assertion, explaining that Guyana is merely getting a quarter of the profits due to the 2016 PSA. He is adamant that what Exxon should have been telling Guyanese on those huge billboards, is who is getting the ¾ of the apple plus the other half of the quarter apple which remains.

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