Government to get 60% of profit from the PSA with ExxonMobil
DPI, GUYANA, Tuesday, April 17, 2018
Guyana’s royalty rate and revenue share of the contract with ExxonMobil and partners are described as favourable when compared with similar agreements worldwide.
Photo credit: Oil Now.
This is according to an exclusive report published today on the leading local oil and gas news website oilnow.gy.
The news report quoted a recent report by UK based Wood Mackenzie, a globally respected oil and gas research firm, and an April 12 report from the Norwegian-based Rystad Energy company.
Guyana is classified as a ‘frontier country’ which means a country which is now getting into oil production. Its Production Sharing Agreement (PSA) with ExxonMobil outlines the government will receive 50 percent profit oil and a two percent royalty which Rystad estimates will result in Guyana taking a total of 60 percent of the profits from the various projects which is described as “the government share”.
This, the report said, is in line with countries that recently opened up for Exploration and Production activities where the government’s take is in the range of 45 to 70 percent.
The analysis, which reviewed the agreements of 70 oil producing countries around the world, debunks the view by some locals that Guyana did not receive a fair deal when the contract was renegotiated by the coalition government in 2016.
Rystad explained in the ‘Oil Now’ report that Guyana has followed a path similar to other frontier countries who offered favourable fiscal terms to attract investors. It added that the government has succeeded in this regard.
ExxonMobil is operating in the Stabroek Block which is estimated to contain 3.2B recoverable barrels of oil. The Noble-Bob Douglas recently arrived in Guyana’s waters and has begun drilling 17 wells to begin oil production in 2020.