Guyana’s Vice President, Dr. Bharrat Jagdeo on Thursday announced new fiscal terms as part of an updated model production sharing agreement being introduced in the new oil producing South American country.
The government has said over the months that new terms will not apply to the existing Stabroek Block agreement which has been heavily criticized as being too favourable to the ExxonMobil-led consortium operating offshore.
A 10% royalty rate will head the new model agreement, up from the 2% granted to Exxon for the Stabroek Block. The 75% cost recovery ceiling has been lowered to 65%. The sharing of profits after cost recovery will remain 50/50 between government and contractor. And a corporate tax of 10% will be instituted, where there was none before.
Dr. Jagdeo explained that while the old terms granted the government a 14.5% share at the start of production, the new terms increased this to 27.5% plus corporate tax.
These terms will apply for the upcoming auction and will also be imposed on any current contracts outside of the Stabroek Block if a discovery is made and moves to production.