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Guyana Oil Share: 1.29 Barrels of oil out of every 100 Barrels
Dear Editor,
It has been reported that Guyana received $336 billion in 2023 from oil, and had to pay $306 billion in taxes for ExxonMobil and partners (KN: Sept. 13, 2024). The implication which can be drawn from this distribution of total revenue is that Guyana only received G$30 billion ($336B – $306B) from the total sales of oil in 2023. Is this amount of $30 billion equal to 14.5 percent of total revenue (12.5 percent of total revenue as profit plus 2 percent as Royalty) as stated in the Production Sharing Agreement (PSA)? The answer to the question is no; and here is the calculation.
Since Guyana received $336 billion, and given that Guyana must receive 14.5 percent of total revenue, this implies that total revenue is $2,317.2 billion, of which EMGL, Hess and CNOOC, the consortium, received $2,287.2 billion, which is equivalent to 85.5 percent of total revenue (Table 1).
However, the real share of oil between Guyana and the consortium is much worse. In particular, with Guyana paying from its share of oil revenue, the taxes of the consortium, the net share of total revenue that Guyana receives of $30 billion is a measly amount of only 1.29 percent of total revenue; while the consortium receives 98.71 percent of total revenue (Table 1). In other words, out of every 100 hundred barrels of oil, Guyana only received 1.29 barrels of oil, as compared with 98.71 barrels for the consortium. Additionally, since Guyana owns the resource, this lopsided PSA arrangement cannot be considered to be fair, given that the tax collected at a rate of 13.2 percent of total revenue is even larger than the profit share of 12.5 percent of total revenue.
More troubling is the fact that since no government pays the taxes for any company, this PSA arrangement clearly indicates that Guyana has forfeited its legal authority and sovereignty to a foreign owned company for a 1.29 percent-pittance! Therefore, the outcome of this arrangement, signals that the Parliament of Guyana, which is the sole authority to introduce taxes, has now been placed in a comatose posture by foreigners who have nullified the Guyanese Constitution.
If the Parliament is serious about its work, it will nullify the payment by the government of the taxes on behalf of the company; and authorize the collection of taxes from the oil company in addition of the 12.5 percent share of profit and the two percent royalty. The outcome of this arrangement will be that Guyana will receive $642B, equivalent to 27.7 percent of total Revenue, as compared with the 1.29 percent under the current PSA (Table 2).
The Guyanese people need to let their politicians know that receiving only 1.29 barrels of oil out of every 100 barrels of oil is unacceptable. Furthermore, the Government of Guyana must have the consortium pay taxes as is customary with every other business; for to have this tax give-away for 40 years on a non-renewable resource is deplorable and the reintroduction of colonialism.
Editor, future generations will be displeased with our incompetence, for they would only inherit token amounts in the bank, an empty hole in the ground, together with a compromised environment. Finally, given that Guyana owns the oil, but is constrained by a lopsided PSA, while receiving only 1.29 barrels out of every 100 barrels of oil, this cannot be a fair deal. Please find a better solution!
Sincerely,
Dr. C. Kenrick Hunte
Professor and Former Ambassador
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