When one examines the manner in which Guyana’s royalty is calculated in the 2016 Production Sharing Agreement (PSA) governing the Stabroek Block, the two-year-old oil-producing State is actually taking home more than the contractor group.
This was recently explained by ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL).
The company said, “If, for example, you have US$100 coming in as revenue, 75 percent goes to cost recovery which covers the contractor group’s investments in exploration, development, and production costs. The remainder is profit and is shared evenly; meaning US$12.5 each goes to the government and the contractor group.”
Now for royalty, EEPGL said the group has to pay 2 percent royalty not from the US$12.5 profit which would be very nominal US$0.25 but from the US$100 revenue. This results in US$2 being taken from its profit and going to the government, In short, Guyana’s take is 14.5 percent “which is more than each contractor. Guyana’s take is 14.5 percent while the contractor group has to split US$10.5 three ways.”
Despite ongoing criticisms of the fiscal terms of the PSA, EEPGL is of the firm conviction that Guyana’s fiscal terms are actually comparable with industry norms and even similar to those of Brazil, Angola and Equatorial Guinea when they started oil production.
