Latest update August 20th, 2026 10:20 AM
Latest News
- OMAI targets average US$1.2B in annual gold production for 18 years
- Total power demand to jump five-fold under development plan
- U.S. debt crosses $40 trillion threshold after doubling under Trump and Biden
- Hamas condemns ‘new war crime’ as Israel kills 10 in crowded Gaza hubs
- Teacher killed after car ‘drifted’ into trench at Lima Sands
We need answers
Dear Editor
In a letter in Kaieteur News dated, April 30th 2023 and captioned “we need to question our leaders more about the oil sector”, I wrote the following, “I got the impression that based on some figure, I think 60 USD a barrel of crude, “Cost Oil” would be 75%…I am asking if, considering that crude is being sold at over US$80, “cost oil” should be a lower % If not is EXXON getting a wind fall.
I do not believe there was any denial of this by the government. I decided to do some research which created additional questions. According to the PSA Article 11.2, “All recoverable contract cost incurred SHALL (my emphasis) subjected to the terms and conditions of any agreement… be recovered from the value, … of a volume of crude oil …. And/or natural gas … produced and sold from the contract area and LIMITED (my emphasis) in any month to an amount which equals seventy-five percent (75%) of the total production from the Contract Area for such month.
Could someone or the government guide us as to what it means when the contract says shall be limited to 75% in any month? Am I to understand that 75% is a cap and so it cannot be more but could be less than 75% and given the high price of oil, “cost oil” should be less than 75%? From where I stand if no one, especially the government, tells me I am wrong and why, then this is daylight robbery and our government has no objections.
I ask this because it also states that if “cost oil” in any month is more than seventy Percent then the shortfall is recoverable in the succeeding months. So, if 75% does not reach “cost oil” they can recover the difference in subsequent months. I take it, if “cost oil” is less than 75% then they should take less than 75%.
Would someone, some Lawyer, Accountant, the Minister or the man in charge of oil and gas, Bharat Jagdeo, please respond to this and my previous letter. If not, readers would assume I am right and the government is deliberately giving away some of our oil for free.
Joel Bhagwandin, a Financial Analyst, who in his article in the Guyana Chronicle, dated September 4, 2022 and captioned. “The Production Sharing Agreement, Renegotiation, and the Stability Clause (Part 1)” stated the following, “development cost for Liza 1 alone amounted to about US$4 billion, the total estimated development cost for Liza 1, Liza 2, Payara and Yellowtail is about US$29.3. I am hoping he may be able to supply some information as to why such a step rise in cost. Maybe the Minster of Natural Resources or the man in charge of oil and gas, or EXXON could give our people an explanation.
Regards
Rajendra Bisessar
Share this:
Discover more from Kaieteur News
Subscribe to get the latest posts sent to your email.
Similar Articles
hits
Blunt of the day
Sports
Features/Columnists
Sir. Ronald Sanders
The GHK Lall Column
Weekend Cartoon
