Guyana’s Minister of Business, Dominic Gaskin on Tuesday condemned what he calls a concerted effort to derail progress in the country’s emerging Oil and Gas (O&G) industry, saying those comparing the country’s 2% royalty to Ghana’s 10% “know very well that they are looking at two different types of agreements and are not painting the complete picture.”
Mr. Gaskin was at the time speaking at the South American country’s Private Sector Commission (PSC) sponsored O&G Seminar held at Duke Lodge in Kingston, Georgetown.
He told those gathered for the opening of the seminar that the information being peddled in the public domain by sections of the local media, particularly as it relates to the Production Sharing Agreement (PSA) the country has signed with ExxonMobil Guyana, “is selective and misleading.”
According to the Business Minister, “I have no problem with us looking at agreements signed by other countries and us learning from them but let’s look at the whole picture and not just the parts where we are getting less than the other country.”
That Ghanaian contract was signed in January of this year and comes on the heels of last September’s ruling by the International Tribunal for the Law of the Sea in favour of that country in its dispute with its neighbour; the Ivory Coast.
He reminded that Guyana’s case with Venezuela has only just been referred to the International Court of Justice. “These are important considerations when entering into a long-term, large-scale investment agreement,” he said.
Mr. Gaskin noted too, “Guyana has a royalty and production sharing type of agreement, while Ghana has a royalty and taxation model.”
Guyana is set to receive a 2% royalty and 50% of profit oil while Ghana receives a 10% royalty and a 35% corporation tax on profit.
Mr. Gaskin told the Guyanese business leaders “prior to this agreement, the other oil companies had been paying a 5% royalty.”
He noted too that Ghana also has Petroleum Exploration and Production Legislation that gives Government a 10% to 15% stake in oil production companies subject to payment of their share of operating expenses.
In Guyana’s case, “Our Petroleum Act has no such provision,” he reminded.
Ghana did not receive a signing bonus and ExxonMobil will recover its costs over a ten year period under that arrangement with the African nation. Meanwhile, Guyana received an US$18M signing bonus and ExxonMobil is set to recover its cost over a five year period, after which, the revenue Guyana earns from oil production will go up.
These were among some of the glaring differences in context between the two countries that are not being presented to the public by critics that point to a higher royalty paid elsewhere such as Ghana, according to Mr. Gaskin.