No amount of dissatisfaction expressed by oil companies about the draft model Production Sharing Agreements (PSA) will result in any altering of the fiscal terms of the document. This much was said today by Vice President, Dr. Bharrat Jagdeo.
At a recent press conference, President of ExxonMobil Guyana, Alistair Routledge said the oil giant is not pleased with the overall content of the draft model PSAs.
Routledge said that the company provided “significant” feedback to the government on the PSAs.
While Routledge did not divulge specifics on its feedback, speculations are that the corporation’s concerns may have to do with the fiscal terms of the PSAs
The model PSAs feature a 10% royalty off the top as opposed to the 2% that ExxonMobil currently enjoys under the PSA for the Stabroek Block.
While the sharing of profit oil will remain 50/50 between Guyana and the respective oil companies, the cost recovery ceiling has been lowered to 65% from 75%.
Further, a 10% corporate tax has been introduced. Currently, Exxon pays none.
If ExxonMobil is to take part in the upcoming auction, that company, like others, will have to sign on to the terms of the new model PSAs.
Following the release of the model PSAs the government invited stakeholders to provide feedback. While the time set aside for feedback has long elapsed, the Government said that it will not ignore the say of stakeholders.
The new PSAs to come which cover deep water and shallow water blocks. They are comprehensive documents that cover fiscal terms, environmental obligations, corporate social responsibility etc.
While the government might be willing to make changes on other aspects of the documents, Dr. Jagdeo has declared that no matter the feedback, the fiscal terms will remain. This therefore goes to whether stakeholders demand more for Guyana or corporations cry out that too much is being sought.
