ExxonM does not deny paying taxes in Bahamas but tells K/News to focus on how the oil deal is delivering money to Guyana

Feb 16, 2025 News

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Kaieteur News-ExxonMobil Guyana Limited (EMGL), the operator of the resource-rich Stabroek Block has not denied that the company pays taxes in the Bahamas.

Kaieteur News reported on February 11 that EMGL, formerly Esso Exploration and Protection Guyana Limited (EEPL) is a company registered in the Bahamas with ExxonMobil Global Holding Investment B.V. being the 100 percent owner of that company.

With new tax arrangements put in place by the Bahamas, Exxon is required to pay a corporate tax of 15% to the country while it does not pay a cent to the government of Guyana (GoG) where the resources here have been driving massive growth for the company and substantial revenue for shareholders.

When asked to clarify this state of affairs on Wednesday at a press conference, President of EMGL, Alistair Routledge attempted to skirt around the issue. He explained that there may be “some confusion” in the use of the word taxes, since Guyana is essentially receiving taxes through royalty and profit payments to the Natural Resource Fund (NRF).

He said, “There are different forms of agreements that are used in the oil and gas industry. The one that is being implemented in Guyana is the Petroleum Sharing Agreement so it’s literally a sharing agreement where the investors invest, the government doesn’t have to make any investment up front but it shares in the profit and receives a royalty.”

As such, he continued, “In effect, that profit-sharing royalty is tax…while it is not called tax in the Petroleum Sharing Agreement in effect that’s what it is. It is payments to the state in lieu of there being a tax agreement.”

Following a lengthy explanation, this publication then pointed out that there was still no clarity as to whether ExxonMobil Guyana was paying taxes in the Bahamas.

Consequently, Routledge noted, “Its normal for international companies to have corporate entity structures across the world that feed up into the master corporate structure, which is Exxon Mobil Corporation and I’m not gonna get into what is the different corporate structures that specifically support ExxonMobil Guyana affiliate but it works both ways. It’s a way that revenues go back to the corporation but it’s also how the corporation feeds investment dollars into the country and so it serves both purposes.”

While the Exxon boss did not deny paying taxes in the Bahamas, he suggested that Guyana should be focused on how the contract delivers revenue for the state.

According to him, “What’s important though ultimately for the investment decisions for the country and for the partnership is, how do the contract deliver money for the country, it’s what the PSA is all about and do we comply with all the local taxes which we do.”

Since oil production commenced in December 2019, Guyana lost over US$10B in taxes to the Stabroek Block partners, ExxonMobil, Hess and CNOOC.

PSA and taxes

The 2016 Production Sharing Agreement (PSA) states in Article 15.1 that the Contractor (EMGL) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge, or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.

Further, Article 15.4 states that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the GRA. It should be noted that the contract also allows for the issuing of a receipt to ExxonMobil, indicating that it has met the local tax requirements to avoid the burden of double taxation.

Though the fiscal terms of the contract have been condemned by Guyanese politicians, the incumbent administration has blatantly refused to engage the company for changes to the contract.

President Irfaan Ali during his end of year press conference on December 31, 2024 made it clear that he has no interest in writing U.S. oil major, ExxonMobil to engage the company to renegotiate the oil deal.

He explained, “What we committed to was to respect the sanctity of contracts and that the international law, that has implications for us as a country. Other investors are looking on but what we said was that future PSAs would not have these fatal flaws and future PSAs would not have the type of lopsided arrangements that Exxon had, and we have made those adjustments to future PSAs.”

But even as Guyana continues to refuse to engage the company, the country is losing more revenue than it is gaining from the production of oil, as pointed out earlier in this article.

(ExxonM does not deny paying taxes in Bahamas but tells K/News to focus on how the oil deal is delivering money to Guyana)

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• Bahamas, deny, Exxon, focus, PSA, Routledge, taxes

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