Chris Ram reveals: Belize charges 7.5% royalty, plus taxes on 5000 barrels per day

Nov 25, 2023 ExxonMobil, News, Oil & Gas

Guyana to pump 1.2 million per day with 2 % royalty, no taxes

Kaieteur News – Following his research on Belize and the robust fiscal regime it has in place for its oil resources, Chartered Accountant, Christopher Ram is convinced, yet again, that Guyana is poorly served by those responsible for overseeing the Natural Resources Sector.

Chartered Accountant, Christopher Ram

Ram, in his column appearing in Friday’s Stabroek News, disclosed some critical highlights about the approach Belizean authorities have taken to get the most value from the nation’s petroleum resources for its people. The columnist revealed that Belize made its first oil discovery in 2005 and currently produces 5000 barrels of oil per day from two oil fields which are operated by Belize Natural Energy (BNE). That company is a subsidiary of a company from The Bahamas, a tax haven with no corporate taxes.

Ram revealed that under Belizean law, the first charge on oil revenue is a royalty of a minimum of 7.5% for oil and 5% for natural gas. He also noted that the government also gets a total share of petroleum. Additionally, Ram highlighted that the country charges an extra tax when oil prices are high. Critically, the profits made by the oil companies are charged at the rate of 40%, all of which were negotiated under a pre-discovery contract.

Ram added, “Compare that with the outlandish fiscal terms Guyana extended to Exxon and (and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited) in a post discovery agreement,” Ram said. In many of his columns, Ram criticised the David Granger-led administration for accepting a mere two percent royalty in the 2016 Production Sharing Agreement for the Stabroek Block where 11 billion barrels of oil resources have been unlocked.

Currently, Guyana has three oil-producing projects – the Liza – Phase One, the Liza – Phase Two and the Payara. From the first two projects, Guyana is producing about 400,000 barrels of oil. The Payara Project which only started production on November 14, 2023, is expected to reach 220,000 barrels of oil, taking Guyana’s overall production to 620,000 barrels of oil by the first quarter of 2024. Guyana is expected to reach 1.2 million barrels of oil by 2027 with the same meager two percent royalty and other damning terms.

OTHER TROUBLING DIFFERENCES

Apart from the fiscal terms, Ram was keen to bring to his readers’ attention, other critical aspects of the regime governing Belize’s oil industry. Ram highlighted for example that oil companies have up to eight years to explore for oil. If a commercial discovery is made, the company is given 25 years for production. If no oil is found within eight years of exploration, Ram said the contract “self-terminates,” meaning that they have to go. No ifs, no buts and no Bridging Deed.

When compared to Guyana where the world’s largest oil find of the decade has been unlocked, oil companies enjoy a more laxed regime. Ram said companies have up to 10 years for exploration and 30 years for production of any commercial find. Ram also noted that the terms are even more generous when looking at the relinquishment provisions. “For good measure, our politicians think they have to plead with oil companies to give us back what represents our patrimony, and what the law requires them to relinquish, anyway,” Ram said.

Guyana’s generosity does not end there. Ram notes that instead of Guyana collecting taxes from the oil companies on the billions they make, Guyana actually pays to the Guyana Revenue Authority (GRA) the taxes payable by the oil companies, out of Guyana’s share of profit oil. The most incredible part of this whole concocted arrangement is that when Guyana pays the taxes for ExxonMobil and its partners, the GRA issues to the companies a certificate stating that they have paid taxes here. The companies then use that fictitious certificate to fraudulently claim a rebate on their worldwide tax liability in their home country.

barrels, Belize Natural Energy (BNE), Belizean, Chartered Accountant, Christopher Ram

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