Jagdeo says Guyanese benefitting from oil wealth

Dec 22, 2024 News

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Kaieteur News- Vice President Bharrat Jagdeo on Thursday told reporters that Guyanese are benefitting from the country’s oil wealth. He was speaking at his weekly press conference held at Freedom House, Robb Street, Georgetown.

He was asked by a Kaieteur News reporter, whether the unprecedented discoveries that oil and gold companies continue to boast of, is reflected in the lives of Guyanese. In response, he said, yes and explained that while the discoveries are one aspect, production is another. He reminded that, to move from one step to another in the process, significant capital investment is needed.

“I pointed out that our total, the aggregate savings in our banking system, now total for Guyanese companies and also individuals, might be around $8 billion that’s all of our savings. Every one of us, the money we have in the bank, plus the companies, 8 billion US dollars. If we had to take that to build one FPSO, we can’t fund a single FPSO,” he said.

Referencing the millions of tons of bauxite that has been discovered but are yet to be extracted he explained that it is not being exported because the markets have changed globally and there is a need for massive investment even though the mineral has been laying there for years.

“So, for you to have a viable strategy, you have to ensure that you have a free, fair fiscal framework that allows an investor to make a decent return on their capital if they take the risk. But at the same time, you have a fair incentive, a flow up back to the Treasury. And I think in the People’s Progressive Party, we have sought, we have accomplished both,” the Chief Policy maker said.

Justifying the concessions being given to companies, especially large companies Jagdeo told reporters that, “We have given enough incentives for people to want to invest and risk their capital and raise capital, which we don’t have. But at the same time, we have changed the fiscal terms.”

He added that this shows that Guyanese “get more, not just the fiscal terms, but the same thing with the passage of the Local Content Law that more opportunities, not of a fiscal nature, but in terms of a procurement and supplies opportunity that they benefit from this.”

The Vice President said that his administration handles economic growth differently and does not only talk about the discoveries made in the oil and gas sector.

Notwithstanding the Vice President’s statements on Thursday, Kaieteur News reported on September 15, 2024 that Guyana’s hope of benefitting from a greater share of profits from the oil and gas sector has been further delayed as ExxonMobil Guyana Limited (EMGL) has added another US$19B in development costs for the country to repay.

Jagdeo told reporters at the time that some US$7B is in the cost bank to be repaid by Guyana. While those costs are likely to be recouped by the Stabroek Block partners by the end of this year, the country will still continue to receive a meager share of the revenues generated in the Stabroek Block.

Jagdeo explained, “Seven odd billion (US-dollars) remains in the cost bank at this time. So I said to them (the technical staff), what about the approved projects, because only some elements of the cost of the approved projects would have been in the cost bank already. So what if you were to include the full cost or the estimated cost of all the approved projects. How much more would you have to add to the cost bank and they gave me a figure of about US$19B to be added.”

The Vice President said the additional US$19B relates to costs associated with Yellowtail, Uaru and Whiptail- Exxon’s fourth, fifth and sixth projects, respectively. Additionally, he noted that a “small balance” is also remaining on the Gas-to-Energy project.

While the combined US$26B will compensate the Stabroek Block partners for the investments made to date, the government of Guyana has been approving more projects which not only inflates the cost bank but delays the country from receiving more profits.

Under the 2016 Petroleum Agreement, the Stabroek Block partners can deduct up to 75% of the monthly production to recover the investments made. This condition will continue to apply until the oil companies’ costs have been fully compensated. In the meantime, Guyana will continue to receive 12.5% profit and a meager 2% royalty.

During the first half of this year alone, Exxon and partners took US$8.5B from the Stabroek Block. A whopping US$7.5B alone was deducted for cost recovery while the partners gained approximately US$1B in profits. Meanwhile, Guyana received US$1.2B during the same period, according to the government’s Mid-Year Report.

(Jagdeo says Guyanese benefitting from oil wealth)

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• benefit, Guyanese, Jagdeo, oil, Wealth

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