Vice President, Dr. Bharrat Jagdeo recently assured stakeholders that Guyana’s revenues from oil is set to increase in the coming years, as ExxonMobil Guyana Limited (EMGL) recovers its investment in the Stabroek Block.
Jagdeo provided the foregoing assurance in response to questions about the high rate of return Exxon currently enjoys on its equity in the Stabroek Block.
Jagdeo explained that while the current rate may appear modest for Guyana’s side, it is expected to grow substantially over time. “If you look over time, this will grow significantly…like right now, if you look at it, it probably would be relatively low…” he said.
The Stabroek Block is governed by the 2016 Production Sharing Agreement (PSA) which allows Exxon and its partners Hess and CNOOC to recover 75% of investments from revenues earned from the sale of oil, before sharing the remaining 25%, with Guyana securing 12.5%.
“So they are going to get a great return on their equity, massive return on their equity,” Jagdeo stated, before highlighting that Guyana will similarly see a significant increase in revenue as Exxon recovers its cost. The Vice President said, “We will, over time too, get a significant increase in revenue because of the clearing of the cost bank, but there is no doubt that they’re going to make a good return.”
Jagdeo reminded that the arrangement is due to the fiscal provisions outlined in the 2016 PSA, which was inked by the former APNU+AFC government with Exxon. “I think it’s self-explanatory. It’s something that I don’t even need to explain…and it’s largely because of the provisions of the PSA,” he added.
Moreover, a December 2023 report from the International Monetary Fund (IMF) indicated that once ExxonMobil Guyana and its partners in the Stabroek Block recoup their costs, Guyana is set to experience a significant increase in revenues. This outlook reinforces Jagdeo’s assertion that the country’s financial gains from its oil sector will grow considerably in the coming years.
