Latest update January 15th, 2025 3:13 AM
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Oil companies to walk away with US$14.7B this year, Guyana only gets US$2.1B
Kaieteur News – Out of US$16.8B in oil exports to be generated in 2024, Guyana is expected to receive US$2.1B. Meanwhile, ExxonMobil and its partners in the Stabroek Block will cart off US$14.7B.
Guyana’s US$2.1B in oil export earnings are the payments Guyana expects to receive from the sale of its share of profit oil. Out of 202 projected lifts of crude, Guyana will get 25. With each lift being approximately one million barrels, Guyana’s entitlement this year is 25 million barrels of crude. Each lift will be marketed and sold by Guyana’s hired marketers, and the funds will be deposited into the Natural Resource Fund.
In addition to profit oil, the oil companies are mandated to pay Guyana royalties of 2% of the crude produced and sold. Government expects US$320M in royalties this year. Added to the profit oil export earnings, Guyana would be making about US$2.4B from oil production in 2024 – a figure that will pale in comparison to the massive earnings of ExxonMobil and its co-venturers in the Stabroek Block.
The Stabroek Block production sharing agreement (PSA) entitles the oil companies to 177 million barrels or 177 lifts. These lifts include crude mostly for cost recovery, and some for profit oil. Oil companies are projected to cart off US$14.7B in value from the production of Guyana’s crude. That is US$12.6B more than Guyana’s projected oil export earnings. That difference alone is enough to pay for this year’s entire national budget TWO TIMES – and still have enough left back to pay for the Gas-to-Energy integrated natural gas liquids plant (NGL) and power plant facility TWO TIMES.
The daylight carting off of most of the value continues the tradition from previous years. Last year, Exxon and partners made away with US$10B out of the US$11.6B in oil exports. The year before that, they got about US$8.6B out of the US$9.9B.
This state of affairs is due to the fiscal terms of Exxon’s PSA, which are held stubbornly in place by a rigid stability clause approved by the previous administration. With ring-fencing provisions absent from the contract, there is no doubt that millions of United States dollars in revenue losses are slipping through the cracks. Despite this status quo, there is neither political will nor intention to renegotiate this contract, on the government’s part. Vice President Dr. Bharrat Jagdeo said that saving extra funds immediately by ring-fencing the projects now, could interfere with Guyana’s long-term investment prospects.
So far, Exxon managed to secure approvals for five offshore developments from two administrations without ring-fencing provisions and a better deal for the latter projects. Late last year, Exxon added a third floating production, storage and offloading (FPSO) vessel to the Stabroek Block. Production shot up to 550,000 barrels of oil per day, according to Exxon’s last press release. It is expected to reach 620,000 barrels per day this year.
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