Saturday, September 30, 2023

CGX contract outlines 53% profit oil, 1% royalty for Guyana

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The petroleum agreement between the Government of Guyana and Canadian-based CGX Resources Inc. (CGX Energy) stipulates 53 percent profit oil and 1 percent royalty for the South American country in the event the company makes a discovery and moves to production.

The petroleum agreement was published on Saturday on the Ministry of Natural Resources website.

Article 11 of the agreement states; the balance of crude oil and/or natural gas available in any month after recoverable contract costs have been satisfied to the extent aforesaid profit oil/gas shall be shared between the government and the contractor for each field in the following proportions; profit oil (and gas), Minister 53 percent and Contractor 47 percent and profit gas, or as otherwise negotiated pursuant to Article 12.

Further, the agreement, signed on February 12, 2013, states that Guyana government’s share of profit oil in Article 11 includes royalty payable by the Contractor at the rate of 1 percent of crude oil produced and sold.

The Production Sharing Agreement between Guyana and ExxonMobil affiliate Esso Exploration and Production Guyana Ltd. stipulates a 2 percent royalty off the top and 50 percent of profit oil.

Calls from the public and civil society saw the Guyana Government releasing the ExxonMobil contract last December. At the time, a commitment was made to release all petroleum contracts as well as those in the other natural resources sectors.

CGX is a Canadian oil and gas exploration company that holds three licenses in the Guyana-Suriname Basin. CGX’s offshore concessions include the Corentyne, Berbice and Demerara concessions while its onshore concession is held through ON Energy Inc.

In December 2017 the company announced a slew of new work commitments related to its Guyana exploration. Among them were exploratory wells to be drilled on all three offshore concessions between 2020 and 2023.

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