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ExxonMobil agrees to pay 10% taxes, 10% royalty for small oil blocks
…but Gov’t refusing to engage company for fair Stabroek Block deal
Kaieteur News- ExxonMobil Guyana Limited (EMGL) has agreed to the fiscal terms outlined in the new Production Sharing Agreements (PSAs) that will govern the smaller oil blocks recently auctioned by the Government of Guyana (GoG).
President, ExxonMobil Guyana Limited, Alistair Routledge (ExxonMobil agrees to pay)
This is according to President of EMGL, Alistair Routledge. During a press engagement, he said, “We are not touching the fiscal terms; we understand that those are set.” Routledge however noted that there were other elements of the contract which the company was not pleased with, specifically with regard to the timelines outlined in the new contract.
According to him, “We’re ongoing discussions with the government on a Petroleum Sharing Agreement…those discussions are ongoing. I don’t think anybody has finalized terms and signed agreements. I think this is a normal stage where we negotiate on the details.”
Government previously said it was advancing discussions with four companies who participated in its inaugural bid round. Routledge could not say whether his company was included in that list or whether Exxon was near to finalizing an agreement with the GoG.
He said, “The important thing is that we continue to have that discussion in a collaborative way to try to find an agreement that works for all parties that incentivizes the investment, that incentivizes taking the risk because of course these are blocks with no discoveries so you are having to take the exploration risk, invest money and not know whether ultimately you will ever make any money back or recover your cost so it has to be an agreement that incentivizes the investment which is what the country wants, but also then returns a reasonable sharing of any profits that may flow in the future should there be economic discoveries.”
ExxonMobil had previously expressed dissatisfaction with certain terms of the new PSA. Be that as it may, the GoG had made it clear that it was not willing to budge on the fiscal terms outlined in the new contract.
The oil companies will be expected to pay a 10 percent royalty and a 10 percent corporate tax to the government of Guyana. In the meantime, the cost recovery will be capped at 65 percent in a given year, while profits will be shared 50/50 between the parties.
Notably, the discoveries made in the Stabroek Block are subject to separate terms which include 2% royalty and no corporate taxes while 75% of the oil produced monthly is deducted by ExxonMobil for costs. The remaining 25% is then split between government and the company as profits.
Despite calls for government to engage Exxon for fairer terms, Guyana’s Head of State, Dr. Irfaan Ali has made it clear that he has no intention of writing the company to seek a renegotiation.
The Stabroek Block measures approximately 6.6 million acres or 26,800 square kilometers. The 14 oil blocks auctioned by government measures between 1000 square kilometres to 3000 square kilometres with the majority of them being close to 2000 square kilometres.
Of the 14 blocks that were auctioned, it was disclosed that six companies submitted bids for eight of the blocks.
In December 2022, President Irfaan Ali launched the country’s inaugural oil blocks auction where bids were later opened on September 10, 2023. Finance Minister, Dr. Ashni Singh in January this year said Guyana is likely to sign three new PSAs in the first half of this year, with successful bidders.
(ExxonMobil agrees to pay 10% taxes, 10% royalty for small oil blocks)
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