Latest update March 28th, 2025 6:05 AM
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- “It will be a very bad day for Venezuelan if they attack Guyana or ExxonMobil”—Rubio declares
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Economist questions Guyana 2022 share of oil revenue
…says money short by US$93M
Kaieteur News – It has been reported that Guyana in 2022 received US$1.254 billion (12.6 percent) from the total value oil sales of US$ 9.978 billion, while Exxon subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) received US$8.724 billion (87.4 percent). Professor of Economics at the US-based Howard University, Cyril Kenrick Hunte is questioning the correct sum of money allocated to the country. The former High Commissioner to South Africa told this newspaper that Guyana’s share of oil revenue is short by some 92million United States dollars, since the manner in which the money was distributed does not meet the conditions of the 2016 Production Sharing Agreement (PSA).
Showing the PSA Distribution of Oil sales to EEPGL and Guyana
“This distribution of the oil revenue between Guyana and EEPGL does not satisfy the conditions in the PSA in which it is stated that Guyana receives 2 percent as royalty; and after subtracting a cost recovery of 75 percent of total revenue for the EEPGL, the remaining amount that is defined as profit, is shared equally.” Hunte told the publication that based on reports in the media EEPGL received 87.4 percent of total revenue, with the remainder of 12.6 percent being Guyana’s share. The Professor believes that Guyana should have received 13.5 percent of the total sales.
Showing Shortage and Overage
Using a table, Table 1, the Professor explained that when Guyana receives its two percent royalty and EEPGL claims its 75 percent expense recovery, 77 percent of the total oil sum has been utilized, leaving 23 percent of the total share to be divided equally. This means each party should receive 11.5 percent. Adding this 11.5 percent to Guyana’s 2 percent royalty would mean that Guyana should have received 13.5 percent of the total oil revenue. Based on those calculations, the Professor showed in Table 2, that Exxon would have received 0.9 percent of Guyana’s share of oil since 12.6 percent was Guyana’s reported take.
Distribution of Sales between Guyana and EEPGL
Professor Hunte said that “Because Guyana should receive 13.5 percent of total sales and not 12.6 percent as reported in the article, this implies that Guyana will be short-changed by 0.9 percent of total sales, as this share is captured by EEPGL.” He opined that while some people might want to imply that 0.9 percent “is insignificant” small percentages make huge differences when working with large sums of money. He said “when you are working with billions, this amount could be costly.” In another table, Table 3, the Professor showed that “with total sales of US$9.9780 billion, Guyana PSA share is US$1.3470 billion (13.5 Percent) and not US$1.2542 billion (12.6 Percent), as reported in the article; and confirmed by the data in Appendix VII of the 2023 Budget presentation.”
“Likewise, EEPGL share, if the PSA distribution is employed, would be US$8.6310 billion (86.5 percent) and not the higher amount of US$8.7238 billion (87.4 percent), as reported in the article. Therefore, this distribution confirms that Guyana’s share is short by US$92.8 million, which is no small amount, given the value of the loans the Government borrows from several international lending agencies.”
The Professor added that in Table 1, which shows Guyana receives 13.5 percent of total sales and EEPGL receives 85.5 percent of total sales, means in other words, that “every time Guyana receives 1 barrel of oil, EEPGL captures 6.41 barrels of oil. This distribution of almost 7 to 1 is unacceptable and must be changed,” the Professor said. He charged that “there is work to be done, and I hope the responsible agency correct this costly error.”
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