Guyana earned more profit oil than Exxon, partners last year- Vice President
In light of a recent financial review in some sections of the media which concluded that the Stabroek Block joint venture partners made more profit oil last year versus Guyana, Vice President and former Finance Minister, Dr. Bharrat Jagdeo dismissed such claims as being misleading.
“I have seen in the newspaper a lot about how Exxon is drawing down hundreds of US billions more and we are getting a pittance. But people making such statements are mistaken,” expressed the former Chairman of the International Monetary Fund and the World Bank.
At a press conference at the Office of the President, Jagdeo explained the formula for cost oil and profit oil as prescribed in the 2016 Production Sharing Agreement.
For 2021, he said there were 42 lifts, which brought in US$3B as gross revenue.
“If you split that into two: cost oil which would be 75 percent is US$2.3B and profit oil is US$700M. The contractor group is supposed to get 50 percent of profit oil and we are supposed to get 50 percent as well. So that works out to US$360 each. Now the contractor has to pay royalty and on this, I can say definitively because I have spoken with officials at the Guyana Revenue Authority (GRA), the royalty is cost deductible from profit oil…,” the Vice President said.
He said the ExxonMobil led group ends up with 10.5 percent of gross revenue while Guyana gets 14.5 percent. In other words, the government gets US$420M in profit for 2021 and the contractor group gets US$300M.
Jagdeo said unfortunately, certain technical personnel have been adding the investment recovered by Exxon towards the profit oil sum. He said this would bring the total to US$2.6B. The economist was keen to warn however that this total does not reflect the true picture of the profit made.
He urged Guyanese to be cautious about the financial reviews they digest since the figures may appear to support “exciting perspectives” but are overall completely misleading.