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Guyana received US$95M in Royalty and gives away US$290M to ExxonMobil in taxes last year
Kaieteur News – While the nation received a meager US$94.5 million in 2022 as royalty for its sweet light crude in the Stabroek Block, the country gave away US$290 million in taxes to multinational oil corporation, ExxonMobil.
Minister of Natural Resources, Vickram Bharrat
When the country signed the lopsided Production Sharing Agreement (PSA) with the oil company in 2016, it agreed to pay the taxes on behalf of the Stabroek Block partners. This means that not only did Guyana pay taxes for Exxon, but it also paid taxes on behalf of Hess Corporation and CNOOC.
The PSA states at Article 15.4 that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the Guyana Revenue Authority (GRA).
According to the company’s financial statements seen by this newspaper, it is understood that in 2022, its income tax expense amounted to GYD$59,381,186,433, while royalty paid to Guyana for that year only totaled GYD$18,892,021,213.
This means the country received three times less than what it lost in taxes to Exxon.
As a result of the lopsided terms embodied in the contract, Guyanese have been protesting for the deal to be renegotiated to ensure the country benefits more from its resources.
GRA in the Auditor General’s Report for the year 2021 reported that a total of US$1 billion in taxes were waived for the oil companies. The report noted that the total tax exemptions granted to the oil and gas sector in 2021 amounted to GYD$203,888,000.
In January last year, Kaieteur News Publisher, Mr. Glenn Lall filed a case in Guyana’s High Court challenging some of the most repressive tax provisions of the Stabroek Block PSA with ExxonMobil and its partners. It wasn’t until February of this year that the Court handed down its ruling, upholding the waiver of the taxes to the oil companies.
In his application, Mr. Lall had contended among other things, that many of the provisions listed under Article 15.1 of the Petroleum Agreement, dated June 27, 2016 between the GOG and the oil companies, grant exemptions to persons other than licensees, which violate the Petroleum Exploration and Production Act (PEPA), and the Financial Administration (and Audit) Act.
As such, the newspaper publisher had requested declarations from the Court that the provisions are unlawful, null and void, and of no legal effect.
In his ruling however, Justice Nareshwar Harnanan said the minister is vested with the power under Section 51 of the PEPA and the Petroleum (Exploration and Production) (Tax laws) to grant EEPGL, CNOOC Nexen Petroleum Guyana Limited, and Hess Guyana Exploration Limited, all companies that are parties to the case, concessions of extensive tax exemptions.
For its part, ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) had contended that Lall stepped outside his boundary when he moved to the High Court to challenge the Government of Guyana’s decision to grant extensive tax waivers to the oil operator and its affiliates.
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