Government has failed its first test of transparency and proper accountability for oil revenues

In our last article, we referred to the US$18 million signing bonus that the Government received from ExxonMobil. When the matter first surfaced in the media, Government officials vehemently denied the existence of such a transaction, with one official considering it “a figment of imagination”. It was only after evidence was produced in the form of a letter from the Finance Secretary dated September 2016 to the Governor of the Bank of Guyana to open a special account to accommodate the payment, that the Government acknowledged the receipt of the money.

We felt that the only compensation the Government is entitled to, for the grant of a petroleum licence, is in relation to licence and other fees, royalty on production, and a share of the profits based on any production sharing agreement. Any payment to the Government outside of these may not be regarded as appropriate and can lead to corrupt behaviour. We therefore suggested that the money be returned to ExxonMobil, notwithstanding that the grant of a signing bonus is not an uncommon industry practice. We believe that it remains the morally right thing to do.

Need for renegotiation of the agreement with ExxonMobil

During the 2018 budget debate, the Minister of Natural Resources stated that the 2% royalty will amount to US$380 million annually at current market prices of crude oil. On 2 June 2017, the Kaieteur News had reported the Ministry of Natural Resources as having stated that: