Guyana receives US$1.4B out of US $9.8B from oil revenue in 2022 - Exxon Annual Report

Guyana receives US$1.4B out of US $9.8B from oil revenue in 2022 – Exxon Annual Report

Jun 21, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – The Stabroek Block in 2022 generated some US$9.8 billion in gross revenue, but Guyana with a 50 percent stake benefitted from a mere US$1.4 billion in profits.

This earning also includes the two percent royalty the country was paid by the operator of the Block, Esso Exploration and Production Guyana Limited (EEPGL). EEPGL is the wholly owned subsidiary of United States oil major, ExxonMobil. According to the 2022 Annual Report by ExxonMobil, some US$7.4 billion in costs were recovered by the oil company towards its investment in the petroleum activities. It also said it earned a profit share of US$0.5 billion or US$500 million last year.

The report states that over 100 million barrels of oil were produced in 2022 by the two operational Floating Production Storage and Offloading (FPSO) vessels- the Liza Destiny and Liza Unity. “This enabled recovery of US$7.4 billion of costs, profit share of US$0.5 billion to EEPGL, and payments totaling approximately US$1.4 billion to the Natural Resource Fund through the 50 percent profit share and two percent royalty paid to the Government,” EEPGL President, Alistair Routledge said in the document.

Chart representing the US$1.4B Guyana received in 2022 (in blue) compared to the gross revenue generated by the Stabroek Block (in red) amounting to US$9.8B.

It was reported that ExxonMobil Corporation and its partners made a handsome profit from the Stabroek Block last year totalling GYD$1.23 trillion (US$5.9B). This is more than double what Guyana has received since the creation of its Natural Resource Fund in 2020. As of April, Guyana has received some US$2.4B in profit oil and royalty from the Stabroek Block operations.

According to the 2022 financials for EEPGL, it earned $577.7B in profits, a substantial increase over its 2021 earnings totaling $132B. Hess Corporation’s 2022 profit was listed as $322.7B while CNOOC was $329.8B.

The partners’ profits are expected to soar beyond GY$1 trillion dollars again in 2023 as the Payara Development Project will hit first oil this year. It will work alongside the Liza Phase One and Liza Phase Two Projects, all of which are expected to produce approximately 600,000 barrels of oil equivalent resources.

Exxon and partners already have five sanctioned projects in Guyana and are eyeing a sixth development in the oil- rich Stabroek Block. The Production Sharing Agreement (PSA) inked with ExxonMobil and its partners in 2016 has been criticized by locals and even international organizations, as the country is forced to hold the short end of the stick. Not only that, but the leaders have refused to renegotiate the deal and are instead chasing possible revenue in other potential oil blocks off the country’s coast.

As part of the arrangement Guyana has with Exxon, the country only receives a two percent royalty on the sweet light crude discovered offshore. More than 11 billion barrels of oil has been discovered to date. The contract allows ExxonMobil to deduct up to 75 percent of the revenue towards cost recovery. The remaining 25 percent (profit oil) is then shared equally between the government and the oil company. This means that 12.5 percent of the revenue goes to Guyana, while the second 12.5 percent profit is shared with the company.

Notably, the agreement also lacks a ring-fencing provision which allows the oil company to develop the resources at other projects in the Stabroek Block, using the revenue from the projects already producing oil. This means that the expenses will ultimately limit the share of profits to be earned. For instance, even though Guyana has paid off the expenses incurred by Exxon to develop the Liza One project, the revenue generated from that development is being still being used to finance other projects. A ring-fencing provision would have allowed for the earnings from that project to be split evenly between the two parties.