Vice President Dr. Bharrat Jagdeo recently affirmed that Guyana’s improved fiscal take from the 14 oil blocks now up for grabs in the nation’s maiden auction is not only a significant improvement over the 2016 Stabroek Block deal, but also one that is strictly formula-based. He categorically stated that government is fully aware of the flaws of the Stabroek Block Production Sharing Agreement (PSA). Be that as it may, he said the relevant modifications have been pursued in the new model contracts to ensure the country gets a higher take.
Recently, local businessman and Kaieteur News Publisher, Glenn Lall criticized the government for the fact that it only received US$219 million out of the US$2.88 billion in oil revenues obtained in the first quarter of this year. In fact, Bank of Guyana disclosed that lower levels of profit oil and royalties were recorded for this quarter, compared to the US$507.64 million and US$66.95 million from the previous quarter. Lall lambasted the government, stating that the country could gain more fiscal benefits if the 2016 Stabroek Block PSA is renegotiated. He also claimed that as oil production increases offshore and ExxonMobil Corporation and its partners continue to add more floating, production, storage and offloading (FPSO) vessels to its developments, Guyana could lose out on US$230 million every three months due to the government’s failure to renegotiate the royalties from two to 10 percent.
During his press conference last week, Jagdeo noted that the government does believe that Guyana should have a greater share. He noted however that it has already decided to leave the 2016 PSA as is. In the new model PSAs being finalized, the government he assured will fix the formula to ensure that Guyana generates more revenue. “You don’t agree with the formula (in the Stanroek Block PSA). That is why we decided to change the formula so that, in future developments, the proceeds will be higher,” he said.
It is worth mentioning that last September, the government took a firm stance against renegotiating the PSA, following consistent criticism from civil society advocate, Christopher Ram. The Ministry of Natural Resources stated that the contract would remain fiscally unchanged for the country and investors’ benefits. Both President, Dr. Irfaan Ali, and Vice President Dr. Bharrat Jagdeo also noted that if specific fiscal considerations are amended in the current PSA, it could have unfavourable effects on current and future investments in Guyana, given the unpredictability of the current global petroleum economy.
