Latest update November 30th, 2024 1:00 AM
Nov 27, 2024 News
Kaieteur News- President of Suriname, Chandrikapersad Santokhi has announced a royalty distribution programme for citizens from the country’s oil wealth.
In his Independence Day address on Monday, the Head of State said royalties will be paid “so that every Surinamese can benefit and profit from oil and gas”.
The Guardian reported that each citizen would receive an amount of $750 in a savings account, with an annual interest rate of seven percent.
President Santokhi said, “Everyone shall benefit from this opportunity and no one will be left behind.” In fact, he told citizens, “You are co-owners of the oil incomes.”
Suriname with a population of about 600,000 people is expected to earn US$10B over the next 10 to 20 years from its oil and gas industry. Production is slated commence in 2028.
Last month, French oil group Total announced a US$10.5B project to exploit an oil field off the coast of Suriname with a capacity of producing 220,000 barrels per day.
Santokhi had previously told AFP his country was “quite aware of the oil curse”, also known as “Dutch disease”, which had befallen other resource-rich countries such as Venezuela, Angola and Algeria that were unable to turn oil wealth into economic success.
Norway became an exception to the “curse” by building up a sovereign wealth fund.
Suriname has set up a similar fund in expectation of the oil cash influx.
The announcement by President Santokhi comes just over a month following President Irfaan Ali’s commitment to deliver a $200,000 cash grant to each Guyanese household. The Government of Guyana later adjusted the announcement to $100,000 per citizen.
Guyana’s oil deal has been repeatedly compared to Suriname’s since the nation, although it is new to the sector, has managed to secure better fiscal terms for its resources.
Managing Director of the state-owned company Staatsolie, Annand Jagesar, compared the contracts of Guyana and Suriname during the announcement of the Final Investment Decision (FID) to develop a production field in Block 58, offshore Suriname.
“Guyana, they have 2% royalty, and 50% profit split, no taxes, and here in Suriname, we have like 6.25 % royalty, profit split according to a certain formula, so the higher the oil price the better for Suriname, but the lower the oil price then the contractor gets protected and we have a stabilized tax rate of 36%,” Jagesar said adding, “So you can do the math and the deal is good but of course everybody has to survive in this partnership.”
Although Guyana’s Production Sharing Agreement (PSA) sets out conditions for a renegotiation of the arrangement with ExxonMobil and partners, Hess and CNOOC, government officials here consider the deal ‘sacred’ and are afraid that requesting modifications could deter investment in the resource-rich Stabroek Block.
To date, ExxonMobil has produced over 500 million barrels of oil since production activities commenced in December 2019.
It should be noted that during this period, Guyana only received about US$5.4B, while the contractors grabbed close to US$26B during the same period for costs alone.
(Suriname to deposit royalty from oil to citizens’ bank accounts)
Nov 30, 2024
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