“If you want to get the most out of the oil sector, then you first have to do an analysis of the exemptions granted to the oil and gas sector operators and how these will affect your take in a development project. The evidence is there to support why you must do this. In fact, every country that failed at oil never did such an assessment. Guyana can assess the facts for itself and have a clearer understanding of where it is heading.”
This was said by Canadian Oil and Gas Expert, David Yager during his interview with the Guyana Standard. Yager insisted that Guyana should not be granting blanket exemptions on exports and imports to oil operators especially when one considers the “poor take Guyana accepted in the agreement with ExxonMobil.”
Yager said that in countries with successfully run oil sectors, exemptions are limited to the exploration stage. If they are granted in the development and production stages, then there is a list of items for which the company is granted such privileges.
The industry expert said, “And this list is limited to about 50 to 100 items. You have to bear in mind that this is one of your avenues for raising money for the State. So why throw it away? …So exemptions in the oil sector is something that needs to be dealt with carefully because they can be extremely distortive and rather than adding value on a net basis to the country’s overall take from the contract, it subtracts from it…”
In the Production Sharing Agreement (PSA) ExxonMobil has with the Government of Guyana, the oil company enjoys the uncapped importation of all items it needs for its project. These items include All Terrain Vehicles (ATVs), Trailers, computers, other vehicles, bulldozers, cement, gravel, hammer wrenches, lights, drums, water tanks, and waste bins.
The items that are considered pre-approved are outlined in Annex D of the contract. Interestingly, even items that were not listed within Annex D are to be considered pre-approved for the oil giant.
