Latest update January 6th, 2025 4:00 AM
Exxon needs Minister’s approval to recover only 3 costs; no permission required for over 200 items
Kaieteur News – The lopsided Production Sharing Agreement (PSA), which the Coalition government entered into with ExxonMobil and its Co-Venturers in 2016 only require Ministerial approval for three costs that can be recovered by the oil companies.
Minister of Natural Resources, Vickram Bharrat
In contrast, the companies are free to spend on a list of over 200 items and recoup those costs without seeking the permission of the subject Minister.
This is outlined in Annex ‘C’ of the Petroleum Agreement, dated June 27, 2016 at Section 3.2. According to the Contract, only the following costs are recoverable with the Minister’s approval: (a) Commission paid to intermediaries by the Contractor; (b) Donations and contributions to organisations in Guyana and (c) Expenditure on research into and development of new equipment, material and techniques for use in searching for developing and producing petroleum which will be of benefit to Petroleum Operations.
While the agreement is definitive on what costs can be approved only with the prior approval of the Minister, it also lists 255 items that can be purchased or paid for during the petroleum operations without permission of the Minister.
Among the charges that can be recovered by Exxon, using Guyana’s oil, without permission of the Minister are holiday, vacation, sickness and disability, life insurance, hospitalization, pensions and other benefits and payments for employees of Exxon and its partners.
Also included are the reasonable travel and personal expenses of such employees including those made for travel and relocation of the expatriate employees assigned to Guyana.
Exxon and its partners can also recover any personal income tax paid for its employees. See more in the link below:
The terms of the 2016 agreement allow the oil companies to deduct 75 percent of the monthly revenues generated in the Stabroek Block to cover their investments. The remaining 25 percent is then shared equally as profits with Guyana. The country is also paid an addition two percent royalty from the contractor’s share of profits.
The Bank of Guyana (BoG) in its 2023 Half-Year Report indicated that ExxonMobil and its partners deducted a whopping US$4 billion in revenue from Guyana’s oil during the first six months of the year.
During the same period – January to June 2023- Guyana received a measly share of its wealth from the Stabroek Block, a total of US$658 million.
It was reported that in 2022, the 26,800 square kilometer (6.6 million acres) oil block, raked in a gross revenue of US$9.8 billion. From its gross revenue, ExxonMobil deducted a whopping US$7.4 billion towards the recovery of its investment for the petroleum related activities. That year, the Natural Resource Fund (NRF) only received US$1.4 billion in revenue.
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