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Exxon to bag five times Guyana’s revenue on 5th project – Professor Hunte
Kaieteur News – For each dollar Guyana is poised to receive from the fifth oil project, approved by the government on April 27, 2023 ExxonMobil will enjoy five times the amount.
This is according to Former Ambassador and Professor, Dr. Kenrick Hunte. In a letter published in Tuesday’s edition of this newspaper, Dr. Hunte used the estimated number of barrels of oil in the fifth oil field, Uaru, along with other variables to draw his conclusion.
Referencing two previous articles published by Kaieteur News, the Professor said he was specifically disappointed that Guyanese are being taken advantage of “in broad daylight” as the country is being left with “crumbs” while Exxon takes the “cake”.
Former Ambassador and Professor, Dr. Kenrick Hunte
He said, “I was again disappointed that the people of Guyana, in broad daylight, were being taken advantage of, given the small share of the total revenue (14.5%) that Guyana will receive from a non-renewable resource that will be exhausted in or before 2034.”
The former diplomat, who holds a PhD in Economics / Rural Finance Markets, a Masters in Economics from the Ohio State University and M.Sc. and B.Sc. in Agricultural Economics from the Utah State University, compiled his findings in a table, attached to his comments.
He pointed out that approximately 812 million barrels of oil will be produced at the Uaru development at an average of US$70 per barrel. This relates to a total revenue of US$56,840,000,000. Notably, he outlined that Guyana’s share is only 14.5 percent of this amount, which accounts for US$8,241,800,000. Meanwhile, Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block and Exxon’s subsidiary, is estimated to bag a share of US$48,598,200,000. In asserting Guyana’s “disappointing” share from its resource, Dr. Hunte highlighted, “For every US$1.00 that Guyana receives for its oil, EEPGL receives US$5.90.”
The Professor described the situation as “inequity and unfairness” since out of Guyana’s share of US$8.24 billion it must pay the taxes of Exxon, pay insurance costs and for the conduct of oil audits. The nation is also expected to “allocate money for clean-up cost at decommissioning; disburse money to fishermen for the loss in income; and set aside money for future generations,” he argued.
Dr. Hunte said Exxon’s comment that “the company’s approach has resulted in tremendous financial success…” and Hess that “successful execution of our strategy (at EEPGL) has uniquely positioned our company to deliver significant value to shareholders for years to come…” has allowed Guyana to see the inequity in distribution of the resources being extracted from the Stabroek Block. He said, “Thank you Kathy Mikells, and John Hess for opening the door for us to see the cake EEPGL will receive as against our crumbs; for out of every 100 barrels of oil extracted from our patrimony, EEPGL captures 85.5 barrels, while poor Guyana, the owner of the resource, receives 14.5 barrels.”
In light of Guyana’s meager share of its oil resource, Guyanese have been calling on the government to renegotiate the 2016 Production Sharing Agreement (PSA) signed with Exxon and its partners to rake in additional revenue for the country.
The incumbent People’s Progressive Party (PPP) Administration is reluctant to bargain for more, even as it continues to approve more projects in the 26,800 square kilometers oil block. Instead, the government is going after more revenue in smaller oil blocks off the country’s coasts. Presently, a new PSA is being finalized. This will govern 14 oil blocks that are on auction at the moment as well as eight other agreements.
Meanwhile, the Opposition has said that while it does not believe in renegotiating the deal, it plans to pursue greater revenue through the introduction of a sliding scale royalty and other measures.
Table used by Dr. Hunte showing the variables used in his calculation
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