ExxonMobil recently announced its 13th discovery of crude oil resources in Guyana’s waters, taking its total discovery to date to more than 5.5 million barrels of oil equivalents. Ever since the Petroleum Agreement with ExxonMobil’s subsidiaries Esso, Nexen and Hess was made public, we have been calling for the Agreement to be renegotiated to ensure that Guyana gets a better share of the oil revenues which are expected to commence flowing in the first quarter of 2020. Our assessment of the Agreement is that it is too heavily weighted in favour of the oil giant, especially in terms of royalty, cost recovery, taxation and profit sharing. According to the IMF, there are too many loopholes in the Agreement, that if not plugged, could result in Guyana losing significant amounts of revenue.
The Agreement provides for Guyana to receive a royalty of two percent which is significantly below what other oil-producing countries are receiving, as highlighted in our article of 5 March 2018. In that article, we had included a table extracted from the Law Library of Congress showing the royalty rates of 22 countries. (See http://www.loc.gov/law/help/crude-oil-royalty-rates/). In countries where ad-valorem rates are applicable, the rates vary from 8 percent to 20 percent. For example, in Trinidad and Tobago the royalty rates are between 10 percent and 12 percent while for the United States, the rate is 16.6 percent. Colombia’s royalty rates are between 8 percent and 25 percent while for Brazil and Peru, the rates are 10 percent and 5 to 20 percent respectively…..