Latest update November 14th, 2024 1:00 AM
Latest News
- “Regardless of a referendum ExxonM has to consent to change oil deal- AG, Anil Nandlall
- ExxonM produced 500 million barrels of oil Since 2019- Company says
- Deadly Israeli strike shatters sense of ‘safety’ in remote north Lebanon
- Govt. signs rental deal for second powership
- Auditors question ICAG’s motive behind suspension of licence and membership
Guyana to pay off ExxonMobil for investments sooner than anticipated – Jagdeo
Vice President, Dr. Bharrat Jagdeo
Kaieteur Sports – While the rest of the world is moving to tax the massive windfall profits being made by multinational oil and gas corporations, policymakers in Guyana have decided to allow the companies to enjoy the benefits of the higher than anticipated oil prices, settling merely for a swift repayment of investments by those companies.
Vice President Bharrat Jagdeo during his weekly press conference, hosted at the Office of the President in Georgetown, on Thursday explained that the country is positioning itself to gain “much more in the outer years”.
The Chief Policymaker for the petroleum sector was at the time responding to a question from this newspaper on whether any options were being considered by government to enable the country to benefit more from its oil resources, in light of the recent report by the International Energy Agency (IEA) predicting a decline in oil prices.
Jagdeo however explained that due to the high price of oil today, the country is repaying ExxonMobil and its partners, Hess and CNOOC, earlier for their investments in the Stabroek Block.
According to him, “Because of higher than anticipated oil prices, the model was run on a different set of numbers- the feasibility and all of that. So the oil prices have been higher than that for a while now.” Consequently, he outlined, “The period that it would take to amortize the investment is shortened and so of the US$30B or so spent through the cost bank, I think it’s about US$28B or about GYD$6 trillion or so that 20B has been paid back from the cost bank.”
Jagdeo therefore pointed out that with the fast rate of cost recovery by ExxonMobil, the government’s share of revenue will soon be significantly increased.
“If it’s moving so fast, the government share, because now you are addressing all of your cost or you’re getting close to repaying your cost, the government share of the revenue would increase significantly…we anticipate that in the next few years our revenue will grow from about US$2B per annum now if oil prices remain the same to about US$8B to US$10B per year so you’re not getting a little bit more, you’re getting much more in the outer years,” Jagdeo posited.
A new report from the IEA however predicts that oil price is likely to decline in the future. This means that Guyana’s oil earnings could be significantly affected. The oil contract with Exxon allows the company to deduct 75% of the monthly revenues for expenses. The remaining 25% is split between Guyana and the oil companies as profits.
In 2023, Exxon deducted a whopping US$8.4B of approximately US$11.8B in oil revenue generated in the Stabroek Block to repay its investments.
EMGL in its 2023 Annual Report noted that a total of 142 million barrels of oil were produced and sold in 2023; Guyana received 17 million profit oil barrels. The price of Brent crude oil averaged US$83 per barrel in 2023. This therefore means that the total revenue generated by Exxon last year was approximately US$11.8 billion.
In 2022, it was reported that the oil company deducted some US$7.4 billion to repay its investments in the Stabroek Block. This therefore means that cost recovery in 2023 grew by approximately US$1B.
ExxonMobil, the operator of the Stabroek Block currently has three Floating Production Storage and Offloading (FPSO) vessels in operation. The company is producing an estimated 645,000 barrels of oil per day and is expected to increase oil production to about 1.2 million barrels of oil per day (bpd) by 2027.
Only yesterday, this newspaper reported that International award-winning Attorney-at-Law, Melinda Janki cautioned that the country could be left with stranded assets, including oil wells that will cost US-billions to safely shut down.
To this end, the Lawyer questioned the government’s business plan and existence of a model which demonstrates oil production is beneficial for Guyana’s economy or financially viable.
She reasoned, “It is very hard to give up the dream of oil wealth for Guyana but surely the time has come to face reality. The International Energy Agency predicts that overproduction will result in 8 billion barrels of oil a day that nobody wants.”
She was careful to also include the imminent gas sector in her analysis, arguing, “The proposed gas project has no financial justification and it will make Guyana dependent on ExxonMobil for electricity.”
- IEA, investment, Jagdeo, repay, sooner
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
Poor Power Planning (PPP)
…Peeping Tom Kaieteur News- Planning has long been the PPP/C government’s pride and joy. The PPP/C touts it at rallies,... more
Rising Gun Crimes in the Caribbean: Urgent Action required by all
By Sir Ronald Sanders Kaieteur News – There is an alarming surge in gun-related violence, particularly among younger... more
Weekend Cartoon
